A significant shift in GST compliance is coming with the redefinition of “Specified Premises” for determining the GST rate applicable to restaurants located within hotel accommodations.
The change comes through Notification No. 05/2025 dated 16 January 2025, issued by the Central Board of Indirect Taxes and Customs (CBIC).
While linking the definition to previous FY supplies is a welcome move, the notification itself introduced certain ambiguities and practical concerns.
To address this, CBIC issued an FAQ dated 27.03.2025, clarifying 28 practical queries related to the concept of “Specified Premises.”
🔎 Where the Confusion Arose
The confusion mainly arose due to clause (c) in the definition of “Specified Premises”, which states:
“A premises for which a person applying for registration has filed a declaration within fifteen days of obtaining acknowledgement for the registration application declaring the said premises to be a specified premises.”
Notably, this clause did not explicitly refer to hotel accommodation, creating doubts whether standalone restaurants could also opt for the declaration.
đź“„ Clarification Through FAQ
The FAQ issued by Central Board of Indirect Taxes and Customs clarifies this in FAQ No. 5:
âś” Only persons supplying or intending to supply hotel accommodation services can file this declaration.
In other words, standalone restaurants cannot opt for “Specified Premises” declaration.
Interestingly, this clarification has been issued through FAQ without a corresponding corrigendum to Notification 05/2025, which itself reflects the level of complexity surrounding this change.
đź“Ś Practical Takeaways
Standalone Restaurants
âś” Continue with 5% GST without ITC
✔ Avoid unnecessary experimentation with the “Specified Premises” declaration.
Restaurants within Hotels
âś” This is the crucial time to conduct a cost-benefit analysis
âś” Decide whether to file the Annexure declaration before 31 March 2025.
đź’ Final Thought
The policy intent of the GST Council may have been straightforward, but the implementation has introduced considerable confusion, as evident from the extensive FAQ clarifications.
And as for a 29th FAQ on extension of timelines…
That may be known only to God and Government!
#GST #RestaurantGST #HospitalityIndustry #CBIC #GSTUpdates #TaxCompliance