GST on Restaurants in India: A Practical Guide

Updated 2026-09-08 · Rates current as of September 2026. Confirm against CBIC GST Portal (cbic-gst.gov.in) before relying on them.

GST is where most restaurant paperwork goes wrong, usually not because the rules are complicated but because the wrong slab gets applied once and then repeats on every bill for a year. This guide covers the rates that apply to restaurant service, when you can and cannot claim input tax credit, and what a compliant invoice has to show.

The two rates that apply to restaurant service

Most restaurants in India charge GST at 5% on food and beverage service, split as 2.5% CGST and 2.5% SGST. The important condition attached to that rate is that you cannot claim input tax credit on your purchases.

The 18% rate applies to restaurant service supplied from what the rules call specified premises: in practice a hotel where the value of any accommodation unit exceeded 7,500 rupees per unit per day at any point in the preceding financial year. Restaurants in that category can claim input tax credit. The basis for this changed on 1 April 2025 — it used to follow the declared room tariff, and now follows the actual value of supply in the previous year. A hotel under the threshold can also opt in by filing a declaration, and opt back out again, so two hotels charging similar room rates today can legitimately bill restaurant service at different rates.

Why losing input tax credit matters more than the lower rate looks

The 5% slab reads like the cheaper option, and for the customer it is. For the business it means the GST you pay on rent, equipment, packaging and professional services is a cost rather than something you can offset. A restaurant paying GST on a commercial rent of ₹1,50,000 a month is absorbing that tax entirely.

This is not a choice you get to make — the slab is determined by your category, not elected. It matters because it changes how you should read your own margins. Purchase costs for a 5% restaurant are genuinely the full invoice amount, so comparisons against businesses that can reclaim tax will mislead you.

Alcohol is outside GST entirely

Alcoholic liquor for human consumption was kept out of GST and remains under state excise and VAT. For a restaurant with a bar this means one bill carries two separate tax regimes: GST on the food, state VAT on the drinks, at rates that vary considerably between states.

Your billing system has to handle this per item rather than per bill. Applying a single tax rate across a mixed order is one of the more common and more expensive errors, because it compounds silently across every table that orders both.

What a compliant tax invoice has to show

The separation of CGST and SGST is the requirement most handwritten and basic-till bills miss. A single combined "GST 5%" line is not a compliant tax invoice, and it is the detail that causes trouble when a corporate customer needs the invoice for their own filing.

• Your name, address and GSTIN
• A unique, sequential invoice number and the date of issue
• The customer's name and GSTIN where they are registered and have asked for a tax invoice
• A description of each item with quantity and taxable value
• CGST and SGST shown as separate line amounts, not merged into one GST figure
• The place of supply
• Total before tax, tax charged, and total payable

How aggregator orders are taxed

For orders through Swiggy and Zomato, the platform is liable to collect and pay GST on the restaurant service under the e-commerce operator provisions. You are not separately charging GST to the customer on those orders; the aggregator handles it.

The commission the aggregator charges you is a separate supply to you, and carries GST at 18%. That GST on commission is a cost for a 5% restaurant, since input tax credit is unavailable. It is worth stating plainly: on a 25% commission, the effective cost including tax on the commission is meaningfully higher than 25%.

Aggregator GST treatment has changed more than once since 2021. If you are reconciling old periods, check the rules in force for that period rather than assuming current treatment applied.

Registration thresholds

GST registration is mandatory once aggregate turnover crosses ₹20 lakh for service providers in most states, and ₹10 lakh in the special category states. Restaurants supplying through an e-commerce operator generally need to register regardless of turnover.

The composition scheme is available to restaurants below the prescribed turnover limit at a 5% rate, with restrictions: no input tax credit, no inter-state outward supply, and you cannot collect tax separately from customers. For a small single-location restaurant it reduces compliance work considerably.

Getting this right without extra work

Almost all of the above is a configuration problem rather than an ongoing effort. Set the correct rate per item once, keep alcohol on its own tax treatment, and make sure invoices split CGST and SGST. After that, compliant invoices are a by-product of billing rather than a separate task, and your monthly figures are a report rather than a reconstruction.

Servyn's GST billing calculates tax per item, keeps alcohol on separate state tax handling, and produces invoices with the required splits. Day and month totals are available directly, which is the part that turns filing from a weekend into an hour.

Frequently asked questions

What is the GST rate on restaurant food in India?

Most restaurants charge 5% GST (2.5% CGST + 2.5% SGST) on food and beverage service, without the ability to claim input tax credit. Restaurants in specified premises — hotels where any room exceeded 7,500 rupees per day in the previous financial year, or that opted in by declaration — charge 18% and can claim input tax credit.

Can restaurants claim input tax credit on GST?

Restaurants on the 5% slab cannot claim input tax credit, so GST paid on rent, equipment and supplies is an absorbed cost. Only restaurants charging 18% — those in specified premises — can claim it.

Is GST charged on alcohol in restaurants?

No. Alcoholic liquor for human consumption is outside GST and is taxed under state excise and VAT instead. A bill containing both food and alcohol carries two different tax regimes and has to be calculated per item.

Who pays GST on Swiggy and Zomato orders?

The aggregator is liable to collect and pay GST on the restaurant service for orders placed through their platform. Separately, the commission they charge you is taxed at 18%, which is a real cost for restaurants on the 5% slab since it cannot be offset.

What is the GST registration threshold for restaurants?

Registration is mandatory above ₹20 lakh aggregate turnover in most states, and ₹10 lakh in special category states. Restaurants supplying through an e-commerce operator such as Swiggy or Zomato generally need to register regardless of turnover.