Know the latest GST rates on food & restaurants in India. Understand how GST impacts dining costs, takeaways, and restaurant billing.
GST on Food Items and Restaurants has made taxes simpler by replacing older taxes like VAT and service tax with a single system. Food and restaurant services are taxed between 0% and 18%, depending on the type of food or dining.
This system makes pricing clearer and easier to understand for both businesses and customers. With the food industry growing fast in India, knowing these GST rates is important.
What is the GST on Food in Restaurants?
GST on Food Items and Restaurants is between 0% to 18% in India. The GST on restaurant food depends on the type of restaurant and is taxed as follows:
| Type of Service | GST Rate |
| Non-AC restaurants | 5% |
| AC restaurants (not serving alcohol) | 5% |
| Restaurants serving alcohol | 18% |
| Restaurants in hotels with room tariffs below ₹7,500 | 5% |
| Restaurants in hotels with room tariffs ₹7,500 or above | 18% |
| Takeaway or home delivery services | 5% |
What is the GST on Food Items?
| Type of Service | GST Rate |
| Non-AC restaurants (not serving alcohol) | 5% |
| AC restaurants (not serving alcohol) | 5% |
| Restaurants serving alcohol | 18% |
| Restaurants in hotels with room tariffs below ₹7,500 | 5% |
| Restaurants in hotels with room tariffs ₹7,500 or above | 18% |
| Takeaway or home delivery services | 5% |
This table categorizes GST rates based on the type of restaurant or dining service offered.
Taxes on Restaurant Bills Before GST Implementation
Restaurant bills were subject to multiple indirect taxes before GST, making taxation complex and inconsistent. The primary taxes were:
- VAT (Value Added Tax): State-specific, ranging from 5% to 20%, applied on the value of food and beverages.
- Service Tax: A flat 15%, levied on 40% of the total bill, applicable only in air-conditioned restaurants.
- Entertainment Tax: Charged in some states for restaurants offering live performances or entertainment services.
For example, in a state where VAT is 12%, dining in an AC restaurant might result in a bill that includes VAT on the food, Service Tax on the total bill, and additional entertainment taxes. The cascading effect resulted in inflated bills as taxes were levied on previously taxed amounts.
Depending on the state, the type of restaurant (AC vs. non-AC), and the type of service provided, the tax structure varied significantly. Non-AC restaurants were often exempt from Service Tax, but had to charge VAT, while alcohol bills often carried a separate tax. Consumers complained about double taxation and unpredictable pricing because of this inconsistency.
GST replaced fragmented taxes with a unified system, ensuring transparency and uniformity. By consolidating taxes into a single rate, GST simplified billing and resolved cascading tax issues, bringing benefits to consumers and businesses alike.
GST Rules for Restaurants
GST rates for restaurants vary based on the type of establishment and services offered. Here’s a detailed breakdown:
Current GST Rates for Restaurants
- 5% GST:
- Applicable to non-AC restaurants and AC restaurants not claiming Input Tax Credit (ITC).
- Includes takeaway services and food deliveries from such establishments.
- Example: A non-AC restaurant serving a ₹1,000 meal charges ₹50 as GST (5%), with no ITC benefit.
- 18% GST:
- Charged by AC restaurants, restaurants serving alcohol, and those claiming ITC.
- Also applies to cloud kitchens and food delivery platforms like Zomato and Swiggy, which act as e-commerce operators.
Updates and Exemptions
- Small Restaurant Exemption: Restaurants with an annual turnover below ₹20 lakh are exempt from GST registration.
- Food Delivery Services: Delivery platforms charge 18% GST on the delivery or service fee, ensuring transparency for both customers and businesses.
GST Calculation on Restaurant Bills
Non-AC Restaurant (5% GST):
- Food bill: ₹1,000
- GST (5%): ₹50
- Total bill: ₹1,050
AC Restaurant (18% GST with ITC):
- Food bill: ₹1,000
- GST (18%): ₹180
- Total bill: ₹1,180
- ITC Benefit: If the restaurant paid ₹80 GST on raw materials, its effective tax liability reduces to ₹100 (₹180 – ₹80).
By offering ITC for AC restaurants and cloud kitchens, GST encourages compliance while maintaining transparency in billing.
Summary of GST Rates for Restaurants
| Type of Service | GST Rate |
| Non-AC restaurants (no ITC) | 5% |
| AC restaurants (with ITC) | 18% |
| Restaurants serving alcohol | 18% |
| Cloud kitchens | 18% |
| Food delivery services (Zomato, Swiggy) | 18% |
The introduction of GST significantly changed how taxes are applied to restaurant bills, streamlining the taxation process and reducing ambiguity for consumers. Here’s a detailed comparison:
Pre-GST Taxation on Food Bills
Before GST, restaurant bills were subject to multiple indirect taxes, including:
- VAT (Value Added Tax): Levied by states on food items, usually ranging between 5% to 20%.
- Service Tax: A central tax at 15%, applied to 40% of the bill amount for air-conditioned restaurants.
- Other State-Specific Taxes: Some states imposed additional charges, such as luxury tax or entertainment tax.
Example (Pre-GST):
For a ₹1,000 bill at an AC restaurant:
- Food bill: ₹1,000
- VAT (12%): ₹120
- Service Tax (15% on 40% of the bill): ₹60
- Total Bill: ₹1,180
The cascading effect of multiple taxes led to higher prices and confusion for consumers, with many bills including “hidden taxes.”
Post-GST Taxation on Food Bills
Under GST, restaurant bills are taxed based on a unified rate:
- 5% GST for non-AC restaurants or AC restaurants not claiming ITC.
- 18% GST for AC restaurants and those serving alcohol, claiming ITC.
Example (Post-GST):
For the same ₹1,000 bill at an AC restaurant not serving alcohol:
- Food bill: ₹1,000
- GST (5%): ₹50
- Total Bill: ₹1,050
For luxury dining or AC restaurants claiming ITC:
- Food bill: ₹1,000
- GST (18%): ₹180
- Total Bill: ₹1,180
Impact of GST on Consumers
- Uniformity and Transparency: GST replaced multiple taxes with a single, transparent rate, eliminating confusion and “hidden taxes.”
- Cost Savings for Everyday Dining: Non-AC and casual dining establishments became more affordable due to the lower 5% GST rate.
- Luxury Dining Costs Remain High: For high-end restaurants under the 18% GST slab, costs stayed the same or increased slightly compared to pre-GST rates.
Impact on the Restaurant Industry
- Input Tax Credit (ITC): Larger AC restaurants can claim ITC on raw materials and services, reducing their tax burden and encouraging compliance.
- Challenges for Smaller Restaurants: Smaller eateries under the 5% GST slab cannot claim ITC, increasing their effective costs.
- Simplified Compliance: Restaurants benefit from a uniform tax structure, making it easier to comply with GST regulations.
Conclusion
The shift to GST simplified the tax system, benefiting consumers through clarity and uniformity. While costs have reduced for casual dining, high-end restaurants face similar or higher prices. GST also brought accountability and efficiency to the restaurant industry, offering opportunities for growth and transparency.
FAQs About GST on Foods
Is GST charged on restaurant food?
Yes, GST is charged on restaurant food. The rate is 5% GST for non-AC restaurants (without ITC) and 18% GST for AC restaurants, restaurants serving alcohol, or food delivery services.
How to calculate GST on food?
To calculate GST on food, multiply the bill amount by the applicable GST rate (e.g., 5% or 18%). For example, if the bill is ₹1,000 and the GST rate is 5%, the GST is ₹1,000 × 5% = ₹50. Total = ₹1,050
