A growing number of people prefer to eat out. This is why there is a huge demand for restaurants, cloud kitchens, and cafés. However, Goods and Services Tax (GST) applies to all these businesses in India. Understanding GST on restaurants, hotels, and other businesses is important as it helps in pricing, billing, and compliance.
Most standalone restaurants in India are subject to 5% GST without Input Tax Credit (ITC). However, the tax rates depend on various factors under the current GST regime of 2025. In this blog, we will understand everything about GST on food bills.
The GST on food bills in India varies based on the food category. The majority of food items fall under the 5% GST slab. However, under the GST 2.0 reform, restaurants within hotels are now classified as ‘specified premises’ and are subject to 18% GST. Standalone restaurants, on the other hand, can choose between charging 5% GST or 18% GST.
Essential food items like fresh fruits, veggies, milk, and meat are exempted. Several changes have been made in the 56th GST council meeting, which have been effective from 22nd September 25. These changes in GST on food are as under:
| Food Category | Old GST Rate | New GST Rate |
| Unpackaged/unbranded staples | 0% | 0% |
| Fresh fruits and vegetables | 0% | 0% |
| Eggs, milk, salt, basic breads (rotis etc.) | 0% | 0% |
| UHT milk, pre-packaged paneer, pizza bread, khakhra, chapathi, roti | 5% | Nil |
| Paratha, Parotta, and other Indian breads | 18% | Nil |
| Condensed milk, butter, dairy fats, and cheese | 12% | 5% |
| Dried nuts and fruits (almonds, pistachios, etc) | 12% | 5% |
| Varied dried fruits (dates, figs, mixed nuts) | 12% | 5% |
| Animal fats, marine animal fats, lard | 12% | 5% |
| Refined sugar, sugar confectionery, pasta, extruded snacks | 12% | 5% |
| Preserved vegetables, jams, jellies | 12% | 5% |
| Fruit & vegetable juices, pre-packaged tender coconut water | 12% | 5% |
| Malt and vegetable extracts, coffee and tea extracts | 18% | 5% |
| Cocoa products (chocolate, butter, powder) | 18% | 5% |
| Sugary and flavoured beverages (carbonated, caffeinated) | 18%/28% | 40% |
The GST on restaurants framework in India is designed based on whether they can avail the Input Tax Credit or not. Restaurants falling under the 5% GST rate have no option to claim ITC. This means they charge 5% GST on food bills, whether it’s GST on dining or GST on takeaway. However, restaurants falling under the 18% GST rate can claim ITC.
| Category | GST Rate | Input Tax Credit (ITC) |
| Standalone AC/Non-AC restaurants | 5% | Not available |
| Takeaway (Any type) | 5% | Not available |
| Food delivery apps/aggregators | 5% | Not available |
| Restaurants within hotels where the room tariff is less than ₹7,500 | 5% | Not available |
| Restaurant in hotels with a room tariff of over ₹7,500 | 18% | ITC available |
| Outdoor catering (Standalone) | 5% | Not available |
| Catering at ‘Specificed premises’ | 18% | ITC available |
| Food supplied or catering services by Indian Railway/IRCTC | 5% | Not available |
| Standalone outdoor catering services | 5% | Not available |
| Normal/composite outdoor catering within hotels where the room tariff is less than ₹7,500 | 5% | Not available |
| Food delivery services | 18% | ITC available |
Under GST on hotels & restaurants, businesses have an option to choose between two taxation methods, i.e. Composite Scheme and the Regular Scheme. The choice can be made depending on the annual turnover, business type, and compliance capacity.
| Feature | Composite Scheme | Regular Scheme |
| Eligibility | Up to ₹1.5 crore per year (₹75 lakh for special category states) | No turnover limit |
| GST rate | 5% on turnover | 5% without ITC or 18% with ITC |
| Input Tax Credit | Not available | Available |
| Inter-state supply | Not permitted | Permitted |
| Supply via E-Commerce | Not permitted | Permitted |
| Tax collection | Cannot collect GST | Can collect GST |
| GST return filing forms | CMP-08 Quarterly, GSTR-4 Annually | Standard monthly/quarterly |
| GST payment | Out of pocket; cannot collect from customers | Collected from customers |
The composite scheme is for small restaurants with a turnover of up to ₹1.5 crore. In this scheme, restaurants have to pay a flat 5% GST on restaurants without getting the benefit of ITC. This simplifies the compliance as the business files quarterly returns and maintains minimal records.
A regular scheme applies to larger restaurants and establishments, which include hotels. Under this scheme, GST on hotels & restaurants is generally 5% without ITC or 18% with ITC for hotel-based dining rooms where the tariff exceeds ₹7,500 per night.
Food delivery platforms like Swiggy and Zomato play a big role in India’s evolving restaurant and food services sector. The GST closely governs their operations in restaurants and food services. Under the current GST rules, these online delivery aggregators have to collect and deposit GST on food bills on behalf of restaurants.
One of the most common doubts among diners and restaurant owners revolves around service charge and GST on restaurants. Both appear on the same food bill but are quite different in nature and purpose.
| Aspect | GST | Service Charge |
| Nature | Discretionary (levied by the restaurant) | Discretionary (levied by restaurant) |
| Who collects the tax | Paid to the government | Retained by the restaurants |
| Rate | 5% or 18% | 5%-10% |
| Applicability | Mandatory | Voluntary (Cannot be forced) |
| Taxable base | On value of food/beverage supplied | May apply on food + beverage; not taxable for GST |
In 2025, it’s important to understand the GST on restaurants for hoteliers, restaurant owners, and diners. The GST on dining changes based on where the food is sold and served. As a restaurant owner, it helps you in proper pricing, billing, and compliance.
Another benefit of understanding GST on restaurants is that it helps properly file the GST return. This acts as proof of income and business performance when you apply for a business loan. At DMI Finance, we offer business loans of up to ₹25 lakh without any collateral to help you grow and expand your restaurants.
1. Is GST applicable to takeaway food?
Yes, GST is applicable to takeaway food. The rate can be 5% or 18% depending on the location of the restaurant.
2. What is the GST rate applicable to food served in trains?
The food served in trains is charged 5% GST irrespective of whether the food is cooked on board or supplied from outside.
3. What is the GST rate levied on chocolate and cocoa products?
Chocolate and cocoa products are charged at an 18% GST rate.
4. Can I claim the GST on my restaurant?
If you are registered under the regular GST scheme, you can claim GST on your restaurant. You can also avail the ITC on GST for inputs such as raw materials and equipment. However, the restaurants that fall under the GST composition scheme cannot claim ITC.
5. Do we have to pay CGST and SGST in restaurants?
Yes, you need to pay both Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) on intra-state transactions. The total GST rate is divided equally between CGST and SGST.
6. Is the service charge included in GST for restaurants?
Yes. Service charge is calculated separately and not included in GST.
7. Are small restaurants eligible for the GST composite scheme?
Yes, small restaurants with an annual turnover up to ₹1.5 crore can avail the composite scheme and pay 5% GST without claiming ITC.
8. Is GST applicable to packaged food items sold in restaurants?
GST on packed food items can range from 5% to 18% depending on the item’s classification under GST rules.
9. Does GST affect food prices for customers?
The majority of standalone restaurants operate under 5% GST without ITC. Restaurants adjust food menu prices to cover the input costs, which indirectly impacts overall food pricing.
10. Is GST applicable to home delivery and catering services?
Yes, GST is applicable to catering and home delivery services. The rate is 5% without ITC unless specified.
