GST on Restaurant Food in India, Explained

GST on restaurant food in India comes down to one question: where is the food served? A standalone restaurant charges 5% GST and cannot claim input tax credit. A restaurant inside a hotel that counts as "specified premises" charges 18% and can claim credit. Most of the confusion on restaurant bills, and in restaurant books, comes from not knowing which side of that line you are on.

Updated October 2026. This guide reflects the rate changes that took effect on 22 September 2025 and the 57th GST Council meeting in October 2026. This is not tax advice: confirm your own position with your CA before you change how you bill.

GST rates for restaurants at a glance

Outdoor catering and banquet rates turn on the venue and on how the event is contracted, so treat those two rows as a starting point and confirm a large catering contract with your CA. Restaurant services use SAC 996331, which covers restaurants, cafés and similar eating places, including takeaway, room service and door delivery of food.

What changed with "GST 2.0" in September 2025

The GST Council's 56th meeting (3 September 2025) reworked the rate structure, with most changes effective from 22 September 2025. For food service, the important points are:

• Standalone restaurants stayed at 5% without ITC. The Council added explanations to the definition of "specified premises" so that a standalone restaurant cannot declare itself to be specified premises and opt for 18% with ITC.
• Hotel rooms up to ₹7,500 a night moved from 12% to 5%, without ITC. This matters to restaurants because the same ₹7,500 figure decides whether a hotel's restaurant is at 5% or 18%.
• Restaurants in higher-tariff hotels stayed at 18% with ITC.

The 57th GST Council meeting in October 2026 made no rate changes. It recommended allowing limited ITC "in the same line of business" for restaurant and outdoor catering services (for example, a caterer subcontracting part of an event), and removing outdoor catering from the blocked credits in section 17(5). These need a notification or a law change before they apply, so check their status with your CA.

Standalone restaurant vs hotel restaurant: what "specified premises" means

Since 1 April 2025, a hotel's premises counts as specified premises for a financial year if, in the previous financial year, the hotel supplied any unit of accommodation at a value above ₹7,500 per unit per day. The test is the actual value charged, not a "declared tariff", which the rules dropped in 2025.

A hotel can also opt in by filing a declaration within the window set by the rules, so its restaurant charges 18% with ITC. A standalone restaurant cannot.

The classification applies to the whole property. If the hotel is specified premises, its restaurant, room service and banquet food are all billed at 18%, for every guest, whether or not they are staying in the hotel.

In practice:

• Standalone restaurant, café, cloud kitchen, dhaba: 5% without ITC
• Restaurant in a hotel where no room crossed ₹7,500 a night last year (and no declaration): 5% without ITC
• Restaurant in a hotel that crossed ₹7,500, or opted in: 18% with ITC

Takeaway, delivery and food apps

Takeaway and home delivery by the restaurant itself are taxed like dine-in: 5% without ITC for a standalone restaurant.

Orders placed through a food delivery platform work differently. Since 1 January 2022, under section 9(5) of the CGST Act, the e-commerce operator (Swiggy, Zomato and similar) collects and pays the 5% GST on restaurant services supplied through it (CBIC Circular 167/23/2021-GST). You do not charge GST again on those orders, but you still report them in your GST return, in the table meant for supplies made through e-commerce operators. Your CA will handle that classification each month.

Input tax credit: why most restaurants cannot claim it

Input tax credit lets a business deduct the GST it paid on purchases from the GST it collects. The 5% restaurant rate comes with a condition: you do not take credit for the GST charged on goods and services used to supply the restaurant service. That includes things like rent, raw materials, kitchen equipment and most services you buy.

For a standalone restaurant, GST on your purchases is a cost, so include it when you calculate dish cost and set menu prices. If you also make other supplies at a different rate, ask your CA how to split credit between them.

At 18% (specified premises), the hotel restaurant can claim ITC on eligible inputs, subject to the normal rules, including the blocked credits in section 17(5).

The composition scheme for restaurants

Small restaurants can choose the composition scheme instead of normal GST. The main rules:

• Who can opt in: restaurants whose aggregate turnover in the previous financial year was up to ₹1.5 crore (₹75 lakh in certain special category states). Gujarat, Maharashtra and most other states use the ₹1.5 crore limit.
• Who cannot: restaurants that serve alcohol
• Rate: 5% of turnover (2.5% CGST + 2.5% SGST), paid by the restaurant out of its own revenue
• No GST on the bill: you issue a bill of supply, not a tax invoice, and you cannot collect GST from guests
• Required wording: the bill of supply must say "composition taxable person, not eligible to collect tax on supplies", and the words "composition taxable person" must be displayed on your signboard
• No ITC, the same as at the regular 5% rate

The rate matches the regular restaurant rate, so composition simplifies compliance rather than lowering tax, and the tax now comes out of your margin instead of the guest's bill. Whether that suits you is a conversation for your CA.

CGST + SGST vs IGST on a restaurant bill

Almost every restaurant bill shows CGST and SGST, split equally. A 5% bill shows 2.5% CGST and 2.5% SGST, and an 18% bill shows 9% and 9%.

That is because, under section 12(4) of the IGST Act, the place of supply for restaurant and catering services is where the service is actually performed. A meal served in Ahmedabad is a supply in Gujarat, so it is intra-state, even if the guest lives in Mumbai or pays with a company card registered in Delhi.

IGST comes up rarely: for example, a caterer registered in one state serving an event in another. That raises registration questions too, so take advice before quoting for out-of-state events.

Here is how a ₹1,000 dine-in bill looks at a standalone restaurant:

Service charge vs GST

These are not the same thing, and guests often confuse them.

• GST is a tax set by law. If you are registered under regular GST, you must charge it.
• Service charge is a fee the restaurant chooses to add. It is not a government levy.

Under the Central Consumer Protection Authority's guidelines of 4 July 2022, a restaurant cannot add service charge automatically or by default, cannot collect it under another name, and must tell guests it is voluntary. The guidelines also say service charge must not be added to the food bill with GST levied on the total. In March 2025, the Delhi High Court upheld the guidelines, holding that service charge cannot be made mandatory. Restaurant associations have appealed, so watch for further rulings, but treat service charge as optional for the guest today.

On the tax side, the Finance Ministry has said that service charge is part of the value of a restaurant's supply under section 15 of the CGST Act, so GST applies to it. Those two positions pull in different directions on how a voluntarily paid service charge should appear on a bill. If you collect one at all, keep it as its own clearly labelled line, never inside the tax lines, and agree the exact treatment with your CA.

What must appear on a restaurant tax invoice

A regular GST-registered restaurant issues a tax invoice under Rule 46 of the CGST Rules. The main details:

• Your name, address and GSTIN
• A consecutive serial number, up to 16 characters, unique for the financial year (letters, numbers, hyphens and slashes are allowed)
• Date of issue
• Description of what was supplied, with quantity and value
• The SAC (996331 for restaurant service)
• Taxable value, after discounts
• Rate and amount of tax, shown separately as CGST and SGST (or IGST)
• The guest's GSTIN, name and address, if the guest is registered and asks for a business bill. For unregistered guests, name and address are needed only when the taxable value is ₹50,000 or more.
• Signature or digital signature of the supplier or authorised person

Two related points:

• FSSAI licence or registration number: FSSAI requires food businesses to print it on bills and cash memos, alongside the GST details
• E-invoicing: if your aggregate turnover has crossed ₹5 crore in any year since 2017-18, bills to GST-registered business customers (B2B) may need an e-invoice with an IRN. Ordinary guest bills (B2C) do not. Ask your CA whether this applies to you.

Common GST mistakes on restaurant bills

• Charging 18% at a standalone restaurant to claim ITC: the 2025 changes made clear this is not an option
• Showing IGST for out-of-state guests: dine-in is CGST + SGST
• Adding GST on a composition bill: composition restaurants cannot collect tax
• Gaps or repeats in invoice numbers, especially after switching software or adding a counter
• Making service charge look mandatory, or mixing it into the tax lines
• Forgetting that purchase GST is a cost at 5%, which quietly pushes up your food cost

How billing software helps (and what it does not do)

Most GST errors on restaurant bills are setup errors, repeated on every bill. Good billing software lets you set the rules once per outlet and applies them consistently.

In KhaanaPina's GST billing, each outlet has its own tax and fee lines (SGST, CGST, service charge, platform fee), each set as a percentage or a flat amount and switched on or off individually. Bills and order records show the SGST and CGST split, each outlet has its own invoice prefix and reset date for numbering, and the end-of-day close summary shows the GST collected that day alongside cash, card and UPI.

KhaanaPina does not file your GST returns or generate e-invoices. Those stay with your CA or your filing tool, and clean, consistent bill data makes their job easier. Read more about restaurant billing in KhaanaPina or our guide to choosing restaurant software in India.

KhaanaPina is restaurant management software built in Gujarat, India, for restaurants across India — QR table ordering, POS billing, kitchen display, table management, inventory and GST-ready reports on one platform. Book a free demo or read more restaurant operations guides on the KhaanaPina blog.