GST on Restaurant Services — 5% or 18%?

For the vast majority of restaurants it is 5% (no ITC) — standalone outlets, budget-hotel restaurants, takeaway, cloud kitchens and outdoor catering. It becomes 18% (with ITC) only when the restaurant is in specified premises, i.e. a hotel where any room's declared tariff is ₹7,500 or more per night, which covers most 5-star hotels.

The same 5% as non-AC restaurants. The earlier distinction between air-conditioned (18%) and non-AC (12%) restaurants was abolished on 15 November 2017. Since then all standalone restaurants — AC or non-AC — charge a uniform 5% without ITC.

No. The GST 2.0 rationalisation effective 22 September 2025 moved goods and services to a two-slab 5%/18% structure but left restaurant services unchanged — 5% for standalone restaurants (no ITC) and 18% in specified premises (with ITC). Note that packaged ice cream as a product fell from 18% to 5%, but a retail ice-cream parlour service still attracts 18%.

Food items are taxed at 5% (or 18% in specified premises). Packaging charged by the restaurant is part of the composite supply and taxed with the food. An optional service charge, if levied, carries the same food rate. Alcohol is shown separately under state VAT/excise, not GST. The tax must be shown separately on the invoice.

Cloud kitchens (delivery-only kitchens with no dine-in) are treated as restaurants under SAC 9963 and charge 5% GST with no ITC. When they sell exclusively through Zomato/Swiggy, the platform pays the 5% under the ECO rule; on orders through their own website or phone, the kitchen collects and pays the 5% itself.

The platform. Since 1 January 2022, Zomato and Swiggy are Electronic Commerce Operators under Section 9(5) of the CGST Act, so the platform — not the restaurant — collects and deposits the 5% GST on the food value. The restaurant issues its bill without collecting that GST but still reports the supply in its returns.

The 5% rate applies only to the food. Delivery charges and platform/convenience fees billed by Zomato/Swiggy are a separate service taxed at 18% as the platform's own supply. Packing charges billed by the restaurant itself are part of the composite restaurant supply and taxed at 5% with the food.

No. Restaurants on the 5% rate cannot claim Input Tax Credit — this is the trade-off for the lower rate. GST paid on rent, kitchen equipment, cooking gas, packaging and raw materials becomes an embedded cost. Only restaurants charging 18% (in specified premises) can claim full ITC on their inputs.

Restaurants are the one service explicitly allowed under the composition scheme. Eligible restaurants pay a flat 5% (2.5% CGST + 2.5% SGST) on turnover if aggregate annual turnover is up to ₹1.5 crore (₹75 lakh in special-category states). They cannot charge GST separately on the bill, cannot claim ITC, and file quarterly CMP-08 plus annual GSTR-4.

A restaurant supplies a service, so registration is mandatory once aggregate turnover crosses ₹20 lakh in a financial year (₹10 lakh for special-category states). Restaurants supplying through an ECO like Zomato/Swiggy, or making inter-state supplies, may need to register regardless of turnover.

Standalone outdoor catering — weddings, events, corporate lunch and caterer-run canteens — is taxed at 5% without ITC. Catering provided inside specified premises (a luxury-hotel banquet where any room tariff is ₹7,500 or more) attracts 18% with ITC.

No. ITC on food, catering and canteen services bought for employees is blocked under Section 17(5)(b) of the CGST Act. The buyer pays the GST but cannot recover it. The exception is a business that is itself in the outward supply of that service — for example a hotel providing food within an event package.

A retail ice-cream parlour that sells already-manufactured ice cream is not a restaurant service — it attracts 18% GST with ITC. This position did not change under GST 2.0. However, ice cream served as part of a meal at a restaurant is taxed at the restaurant rate (5% or 18%), and packaged ice cream as a product fell from 18% to 5% from 22 September 2025.

Takeaway and parcel orders from a restaurant attract the same 5% GST as dine-in. There is no separate packaged-food rate for a hot meal parcelled at the counter — it remains a restaurant supply. Only sealed, pre-packaged manufactured food follows product-wise HSN rates.

Alcoholic liquor for human consumption is outside GST and is taxed under state VAT/excise instead. A restaurant bill that includes drinks shows 5% GST on the food portion and separate state VAT on the alcohol portion — the two are billed under different tax heads.