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Table of Contents
[F. No.354/173/2017 -TRU]
Government of India
Ministry of Finance
(Department of Revenue)
New Delhi, the 14th November, 2017
Notification No. 46/2017 - Union Territory Tax (Rate): Seeks to amend notification No. 11/2017 - UTT(R) so as to specify rate @ 2.5% for standalone restaurants and @9% for other restaurants, reduce rate of job work on "handicraft goods" @ 2.5% and to substitute "Services provided" in item (vi) against Sl No. 3 in table.
GST: [TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
G.S.R......(E).- In exercise of the powers conferred by sub-section (1) of section 7, subsection (1) of section 8 and clause (iv) and clause (v) of section 21 of the Union Territory Goods and Services Tax Act, 2017 (14 of 2017) read with sub-section (5) of section 15 and sub- section (1) of section 16 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary in the public interest so to do,
hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No.11/2017- Union Territory Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 702(E), dated the 28th June, 2017, namely:-
In the said notification, in the Table,-
- against serial number 3, in item (vi), in column (3), for the words “Services provided”, the words “Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, provided” shall be substituted;
- against serial number 7,-
- for item (i) in column (3) and the entries relating thereto in columns (3), (4) and (5), the following shall be substituted, namely:-
| (3) | (4) | (5) |
| “(i) Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied, other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent. Explanation.- “declared tariff” includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit. | 2.5 | Provided that credit of input tax charged of input tax charged services used in supplying the service has not been taken [Please refer to Explanation no. (iv)].”; |
- for item (iii) in column (3) and the entries relating thereto in columns (3), (4) and (5), the following shall be substituted, namely:-
| (3) | (4) | (5) |
| “(iii) Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied, located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent. Explanation.- “declared tariff” includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit. | 9 | -”; |
- the item (iv) in column (3) and the entries relating thereto in columns (3), (4) and (5), shall be omitted;
- in item (ix), in column (3), for the entry, the following entry shall be substituted, namely:-
“(ix) Accommodation, food and beverage services other than (ii), (iii), (v), (vi), (vii) and (viii) above.
Explanation.- For the removal of doubt, it is hereby clarified that, supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises
where such food or any other article for human consumption or drink is supplied, other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent shall attract Union territory tax @ 2.5% without any input tax credit under item (i) above and shall not be levied at the rate as specified under this entry.”;
- against serial number 26, in column (3), in item (i), after sub-item (h), the following shall be inserted, namely: -
‘(i) manufacture of handicraft goods.
Explanation. - The expression “handicraft goods” shall have the same meaning as assigned to it in the notification No. 32/2017 -Central Tax, dated the 15th September, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 1158 (E), dated the 15th September, 2017 as amended from time to time.’.
2. This notification shall come into force with effect from 15th of November, 2017.
(Ruchi Bisht)
Under Secretary to the
Government of India
Note: -The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 11/2017 – Union Territory Tax(Rate), dated the 28thJune, 2017, vide number G.S.R. 702 (E), dated the 28th June, 2017 and was last amended by notification No. 31/2017- Union Territory Tax (Rate) dated the 13th October, 2017 vide number G.S.R. 1279(E), dated the 13th October, 2017.
📚 Frequently Asked Questions (FAQs): Notification No. 46/2017 - Union Territory Tax (Rate)
Q1: What is Notification No. 46/2017 – UTGST Rate?
Answer:
It is a GST notification issued on 14 November 2017 that amended GST rates for restaurant services, handicraft job work, and works contract services.
The notification significantly changed GST treatment for standalone restaurants by reducing the tax rate to 5% without ITC.
Q2: From when did the new restaurant GST rates apply?
Answer:
The revised GST rates became effective from 15 November 2017.
Businesses had to update billing systems and GST treatment from this date onward.
Q3: What is the GST rate for standalone restaurants under this notification?
Answer:
Standalone restaurants became taxable at 5% GST without Input Tax Credit.
This includes restaurants, canteens, eating joints, and mess services not located in specified luxury hotels.
Q4: Can standalone restaurants claim ITC?
Answer:
No. Restaurants paying GST at 5% under this notification cannot claim Input Tax Credit.
This restriction applies to inputs, input services, and capital goods used for restaurant services.
Q5: Which restaurants attract 18% GST?
Answer:
Restaurants located inside hotels having declared room tariff of ₹7,500 or above per unit per day attract 18% GST.
The higher rate applies because such establishments fall under premium hospitality classification.
Q6: What is meant by declared tariff?
Answer:
Declared tariff includes charges for amenities provided with accommodation such as furniture, AC, refrigerators, and similar facilities.
Discounts offered do not reduce the declared tariff for GST classification purposes.
Q7: What change was made for handicraft job work?
Answer:
GST on job work relating to manufacture of handicraft goods was reduced to 5%.
This was introduced to support artisans and traditional handicraft sectors.
Q8: Does every job worker qualify for the reduced GST rate?
Answer:
No. The concessional rate applies specifically to manufacture of handicraft goods as defined under the relevant notification.
Proper classification and documentation are important.
Q9: Why was the restaurant GST structure changed?
Answer:
The government wanted to simplify restaurant taxation and reduce prices for consumers.
However, the lower GST rate came with blocked ITC to balance revenue implications.
Q10: Did takeaway food also qualify for 5% GST?
Answer:
Yes. The notification clearly stated that the concessional rate applies whether food is consumed on premises or away from premises.
This included takeaway and similar restaurant supplies.
Q11: What was the works contract amendment about?
Answer:
The notification replaced the wording “Services provided” with “Composite supply of works contract.”
This aligned GST treatment with the legal definition under the CGST Act.
Q12: Is this notification still relevant today?
Answer:
Yes. Although restaurant GST rules have evolved further, this notification remains an important milestone in GST rate rationalization history.
It laid the foundation for the current restaurant taxation framework.
Q13: Why do restaurant GST disputes still happen?
Answer:
Most disputes arise from classification issues, ITC claims, and hotel tariff interpretation.
Businesses often misunderstand exemption conditions or apply incorrect GST rates.
Q14: Does the 5% GST scheme benefit all restaurants equally?
Answer:
Not necessarily.
Restaurants with high operational expenses may suffer due to blocked ITC even though customers pay lower GST.
The financial impact varies by business model.
Q15: Should businesses review GST classification regularly?
Answer:
Yes. GST notifications and interpretations change frequently.
Periodic GST reviews help avoid tax notices, ITC disputes, and incorrect rate application.
Businesses uncertain about compliance often seek expert guidance through GST Registration Services or professional GST review support.
Conclusion
Notification No. 46/2017 – UTGST Rate was one of the most impactful GST amendments for the restaurant industry during the early GST phase.
The notification:
- reduced GST for standalone restaurants,
- clarified higher taxation for luxury hotel restaurants,
- provided relief to handicraft job workers,
- and strengthened works contract terminology.
In practical terms, it changed how restaurants priced food, managed ITC, and structured operations.
Download PDF: Notification No. 46/2017 - Union Territory Tax (Rate)
More Information: https://taxinformation.cbic.gov.in/
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