GST on Restaurant Food in India

Working out the GST on restaurant food

Most restaurant food is taxed at 5% without input tax credit, and the calculator below uses that rate. Dining inside a hotel with room tariffs above ₹7,500 is 18% instead, so check which case you are in first. Multiply the taxable value by 5 percent to get the GST, then add it to the base price for the total.

• For an intra-state sale, the 5% splits into 2.5% CGST and 2.5% SGST.
• For an inter-state sale, a single 5% IGST applies instead.
• The calculator on this page is pre-set to the 5% rate and handles both cases.

A worked example

Suppose a restaurant bill has a taxable value of ₹1,000 before tax. Applying 5% GST works out as follows.

GST on restaurant services by type

Most restaurant food is taxed at a flat 5% without input tax credit. The old distinction between AC and non-AC restaurants is gone, so a roadside eatery and an air-conditioned cafe now charge the same 5%. The one place the rate jumps is dining inside a high-tariff hotel. The table sets out the cases.

The trade-off behind the 5% rate

The 5% rate comes with a trade-off: a restaurant charging it cannot claim input tax credit on its rent, raw materials, kitchen equipment or packaging. That GST becomes a sunk cost baked into menu prices. This is a deliberate design choice to keep the headline rate low. Restaurants inside high-tariff hotels, taxed at 18%, are the exception and can claim ITC.

Ordering through Zomato and Swiggy

Since January 2022, food-delivery platforms are treated as the tax collector for restaurant orders placed through them. When you order via Zomato or Swiggy, the platform collects the 5% and deposits it with the government, so the restaurant neither collects nor pays GST on those specific orders. On the customer bill the effect is the same 5%.

Packaged items and drinks on the bill

Food prepared and served attracts 5%, but a sealed packaged item sold alongside, such as a bottled soft drink or a packet of chips, can carry its own higher rate. Alcohol sits entirely outside GST and is taxed under state excise instead, which is why a bar bill shows separate tax treatment for drinks.

The composition scheme for small restaurants

A restaurant with annual turnover up to ₹1.5 crore can opt for the composition scheme and pay a flat 5% on turnover instead of the regular route. The trade-off is strict: a composition restaurant cannot collect GST from customers on the bill, cannot claim any input tax credit, and cannot make inter-state supplies. It files a simple quarterly statement rather than monthly returns. For a small single-outlet eatery the reduced compliance burden is often worth more than the credit it gives up.

Registration thresholds

Restaurant service is a service for registration purposes, so the threshold is ₹20 lakh of aggregate turnover (₹10 lakh in special category states), not the ₹40 lakh that applies to goods. A cloud kitchen selling only through delivery platforms still needs registration once it crosses that threshold, and in practice most platforms require a GSTIN to onboard at all.

Reading your restaurant bill

A correct bill shows the food total, then 2.5% CGST and 2.5% SGST as separate lines, and nothing else labelled as tax. Two things to watch. A service charge is not a tax, it is a voluntary levy by the restaurant and is not payable if you object, though GST does apply to it when charged. And a bill showing 18% at an ordinary standalone restaurant is wrong unless it sits inside a hotel with room tariffs above ₹7,500. If the bill bundles alcohol and food into one taxed line, that is also incorrect, since alcohol sits outside GST.

Frequently asked questions