If you run a hotel, café, bakery-cum-restaurant or cloud kitchen in India, the GST rate on restaurant food is not one single number. Most restaurants charge 5% GST without input tax credit, but restaurants inside certain hotels charge 18% with input tax credit, ice cream parlours are taxed as sellers of goods, and food apps pay the GST on orders placed through them. This guide explains each case in plain language, with worked bill examples from Kerala, and shows how to set up tax classes in your restaurant billing software so every bill comes out right.
Note: GST rules change through notifications and circulars. This guide reflects the position after the rate changes of 22 September 2025. Confirm your own case with your tax consultant before you change your billing.
GST rate on restaurant food in India: the quick answer
Under GST, “restaurant service” means supplying food or drink as part of a service by a restaurant, eating joint, mess or canteen, whether the customer eats on the premises or takes it away. The rate depends mainly on where the restaurant operates and how the order reaches you:
| Type of outlet / order | GST rate | Input tax credit (ITC) | Who pays the GST |
|---|---|---|---|
| Stand-alone restaurant, café, hotel (eatery), mess, canteen – dine-in | 5% (2.5% CGST + 2.5% SGST) | Not available | Restaurant |
| Same restaurant – takeaway, parcel or own home delivery | 5% | Not available | Restaurant |
| Cloud kitchen or central kitchen (cooking and supplying food) | 5% | Not available | Restaurant, or the app for app orders |
| Orders through a food delivery app (e-commerce operator) | 5% | Not available | The app, under Section 9(5) |
| Restaurant located in “specified premises” (certain hotels – see below) | 18% (9% CGST + 9% SGST) | Available | Restaurant / hotel |
| Outdoor catering (weddings, events) outside specified premises | 5% | Not available | Caterer |
| Ice cream parlour selling ready-made ice cream | Rate for ice cream as goods | Available | Parlour |
For a typical Kerala hotel serving meals, porotta and beef fry, or a tea shop serving snacks, the answer is 5% without ITC. The rest of this guide covers the exceptions that trip people up.
Stand-alone restaurants, takeaway and cloud kitchens
The CBIC clarified in Circular 164/20/2021-GST that restaurant service includes takeaway, room service and door delivery of food. Cooking and supplying food only by takeaway or delivery, which is what cloud kitchens and central kitchens do, also counts as restaurant service at 5% without ITC.
Worked example: a family restaurant in Kochi
A family orders food worth ₹1,200 at a stand-alone restaurant in Kochi (an illustrative bill):
- Food value: ₹1,200.00
- CGST @ 2.5%: ₹30.00
- SGST @ 2.5%: ₹30.00
- Bill total: ₹1,260.00
A parcel of the same food costs the customer the same ₹1,260. Takeaway does not get a lower or higher rate. Packing charges added to the bill are part of the same supply, so they also attract 5%.
What “without ITC” means for your costs
At 5%, the restaurant cannot claim input tax credit on GST it pays on purchases: kitchen equipment, packaging, rent, repairs, software and so on. That GST becomes part of your cost. It should go into your plate cost and overheads when you price menu items; you cannot recover it from the government. The same applies to GST you pay under reverse charge, for example on rent paid to an unregistered landlord: it is a cost, not a credit.
The trade-off is simple. You charge customers a low 5%, but you give up the credit on inputs. You cannot choose to pay 18% instead to get ITC. The GST Council made it clear in September 2025 that a stand-alone restaurant cannot declare itself “specified premises”.
Restaurants in hotels: when 18% with ITC applies
The 18% rate applies only to restaurant service supplied from specified premises. From 1 April 2025 (Notification 05/2025-Central Tax (Rate)), a premises is specified premises for a financial year if:
- in the previous financial year, it supplied hotel accommodation where the value of any room (unit) was above ₹7,500 per day; or
- the registered hotel filed a declaration between 1 January and 31 March of the previous year opting to treat the premises as specified premises; or
- a new applicant filed that declaration within 15 days of the acknowledgement of its registration application.
The test now looks at the actual value charged for a room, not the published “declared tariff”. So a resort in Munnar that charged more than ₹7,500 a day for even one room during 2025-26 will have its restaurant at 18% with ITC for 2026-27. A lodge in Thrissur whose rooms all stayed at or below ₹7,500 continues at 5% without ITC, unless it opted in by declaration.
Worked example: the same ₹1,200 order in a specified-premises hotel
- Food value: ₹1,200.00
- CGST @ 9%: ₹108.00
- SGST @ 9%: ₹108.00
- Bill total: ₹1,416.00
The guest pays more tax, but the hotel can claim ITC on its inputs, such as kitchen equipment, linen, renovation and services, and set it off against this output tax. Hotels should check their status at the start of every financial year, because a single high-value room night in the previous year can change the rate for the whole year.
Food delivery apps, ice cream parlours, bars and composition dealers
Orders through food delivery apps
Since 1 January 2022, restaurant service supplied through an e-commerce operator has been notified under Section 9(5) of the CGST Act. The app collects and pays the 5% GST on those orders, not the restaurant (Circular 167/23/2021-GST). In practice:
- Do not charge and pay GST again on app orders. Record them as sales made through an e-commerce operator and report them that way in your returns.
- Orders from your own website, WhatsApp or phone are still your own sales, and you pay the 5% on them.
- App orders still count towards your aggregate turnover for registration and other thresholds.
Ice cream parlours and bakeries with a retail counter
A parlour that only scoops and serves ready-made ice cream, without cooking, supplies goods, not restaurant service. It charges GST at the rate notified for ice cream and can claim ITC. Goods rates were revised from 22 September 2025, so confirm the current rate for your HSN code. Similarly, a bakery that sells packed biscuits or cakes over the counter is selling goods at their HSN rates, while food served at its tables is restaurant service. If you run both, keep the two kinds of sale on separate tax classes.
Bars and liquor
Alcoholic liquor for human consumption is outside GST. In Kerala it is taxed under state law. A bar-restaurant charges 5% (or 18% in specified premises) on food and soft drinks, and bills liquor separately under state tax.
Small restaurants under the composition scheme
Restaurants with aggregate turnover up to ₹1.5 crore in the previous year (the limit for Kerala) can opt for composition and pay 5% of turnover (2.5% CGST + 2.5% SGST). A composition restaurant cannot collect GST from customers. It issues a bill of supply instead of a tax invoice and pays the tax from its own margin. Compare that with the regular 5% scheme before you opt in.
How to set up GST tax classes in your restaurant POS
Most billing errors in restaurants come from a wrong default tax rate or from mixing goods and services on one rate. Set up your restaurant POS software once, carefully:
- Create a “Restaurant service 5%” tax class split as 2.5% CGST and 2.5% SGST, and make it the default for all cooked food, beverages and packing charges. Use SAC 996331 (restaurant services) unless your consultant advises a more specific code.
- Create an 18% class only if you are specified premises for this financial year, and switch it on 1 April after reviewing last year’s room values.
- Add separate classes for goods such as ready-made ice cream or packed bakery items sold over the counter, using each item’s HSN code and current rate.
- Tag order channels. Mark aggregator orders separately from dine-in, takeaway and own delivery so they are not taxed twice and your returns match.
- Keep liquor off the GST tax classes, or on a separate non-GST billing series, as your consultant advises.
- Show the tax split on every bill. A proper GST invoice shows GSTIN, invoice number, SAC/HSN, taxable value and CGST/SGST amounts. Our guide to GST invoice software lists the mandatory fields.
- Check one test bill per class before going live: a dine-in bill, a parcel, an app order and a counter sale. Match the GST totals against a calculator.
For the wider picture of billing, reports and GSTR-1 data from your software, see our guide to GST billing software.
Common GST mistakes restaurants make
- Charging 18% because “AC restaurant”. The old AC/non-AC difference ended in November 2017. Air conditioning does not decide the rate today; specified premises does.
- Claiming ITC at 5%. Credits on rent, equipment or packaging cannot be used against 5% restaurant output tax. Wrong claims lead to demands with interest.
- Paying GST on app orders as well. The app already pays it under Section 9(5).
- Composition restaurants showing GST on bills. They must issue a bill of supply without tax.
- Not reviewing hotel status every April. Room values from the previous year decide the restaurant rate for the current one.
Bill restaurant GST correctly with Caddayn Biller
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FAQ: GST rate on restaurant food
Is GST on restaurant food 5% or 18%?
For most restaurants it is 5% without input tax credit. It is 18% with ITC only when the restaurant is in specified premises, meaning a hotel that charged more than ₹7,500 per day for any room in the previous financial year, or that opted in by declaration.
Is GST on takeaway food different from dine-in?
No. Takeaway, parcel and door delivery by a restaurant are restaurant service, taxed at the same rate as dine-in.
Do I charge GST on Swiggy or Zomato orders?
No. For restaurant service supplied through a food delivery app, the app pays the 5% GST under Section 9(5). You still record those sales and report them as supplies made through an e-commerce operator.
Can a restaurant claim input tax credit?
Not at the 5% rate. Only restaurants in specified premises paying 18% can claim ITC on their inputs.
Does a small restaurant need to charge GST?
If you are not required to register (for example, turnover below the threshold for services), you do not charge GST. If you are under the composition scheme, you pay 5% of turnover yourself and cannot charge GST on the bill.