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GST- Restaurant Service (Franchisees)

Rate / HSN codes 115 views 1 replies

Naidu T

6 Points Joined July 2025

Hello,

A restaurant is preparing and supplying cooked and semi cooked foods (including getting its raw materials for food preparation) to its franchisees (invoicing them as sales) and collecting Royalty for brand name usage. These franchisees are using brand name but are legal entites registered independent of this restaurant. The restaurant is treating these supplies of food to franchisees as Restaurant Service, Is it the right way to do so?

Or should this be treated as Supply of goods?

Replies (1)

Rama chary Rachakonda

Master in Accounts & high court Advocate

9142 Points Joined December 2011

Supply of cooked/semi-cooked food could be treated as a supply of goods.
Restaurant service classification: If treated as a "restaurant service", GST is typically charged at 5%(without Input Tax Credit for the recipient if composition scheme is not applicable).
Supply of goods vs. services: it attract GST based on the food items' classification. If it is a supply of services (like restaurant services), GST applies accordingly.
Franchisees are independent entities. Royalty collection for brand usage is a servie and attracts GST (18% typically for royalities).
The nature of the supply (goods vs.services) determines the GST RATE AND TREATMENT.