GST on restaurant food is 5% without input tax credit if you run a standalone outlet. That covers dine-in, takeaway and the food you send out for delivery. One rate, three channels.
The 18% rate exists, but it is not a choice you get to make. It applies to restaurants inside premises that also let rooms above a set nightly value. The Council closed the last route into it in September 2025.
What decides your rate is where the restaurant sits. Not what you sell, and not how the customer takes it away.
This post covers the rate for each kind of outlet, what happens to alcohol and delivery, and five errors that keep turning up on real bills.
Key Takeaways
- You do not choose your rate. The premises decides it, and almost everyone lands on 5%.
- Takeaway is the same 5%. Bill a parcel at 18% and you owe every rupee of it.
- Alcohol carries no GST, so a bar bill runs two tax regimes down one page.
- The 5% looks cheap until you count the credit you give up.
What Is the GST Rate on Restaurant Food?
Restaurant food is taxed as a service, not as goods, and that single fact decides most of what follows. The rate for each kind of outlet is below.
At a standalone restaurant the rate is 5%, split as 2.5% CGST and 2.5% SGST, and you cannot claim input tax credit on it. The same 5% applies whether the customer eats in, carries the food out, or has it delivered.
| Where the restaurant is | GST rate | Input tax credit |
|---|---|---|
| Standalone restaurant, cafe, QSR, cloud kitchen | 5% | Not available |
| Mess, canteen or cafeteria on contract | 5% | Not available |
| Restaurant inside a hotel, rooms at ₹7,500 or less | 5% | Not available |
| Restaurant inside a hotel, rooms above ₹7,500 | 18% | Available |
| Railway and IRCTC catering | 5% | Not available |
| Outdoor catering, away from specified premises | 5% | Not available |
| Food at an exhibition, event or conference | 18% | Available |
The pattern is simpler than the table looks. Almost everyone charges 5%. The 18% cases are hotels above a price point, and event catering. Between them they cover a small share of Indian restaurants.
Settle which branch you are on first. Everything below assumes you know.
Why Takeaway and Delivery Do Not Change the Rate
A parcel is still restaurant service. You cooked it, you plated it, you packed it. The law treats all of that as one service, not as a sale of food.
The classification code says so outright. SAC 996331 covers services by restaurants and cafes “including takeaway services, room services and door delivery of food”. All three sit under the same code, so all three carry the same rate.
So a biryani costs the customer the same tax whether they sit down, collect it at the counter, or order it to their flat. There is no separate takeaway rate, and a bill that charges one is wrong in a way that is expensive to unwind.
Where the 18% Rate Actually Applies
A restaurant inside a hotel charges 18% with credit when that hotel is a specified premises. The test looks at whether any unit of accommodation was supplied above ₹7,500 per day in the preceding financial year.
Two things about that test trip people up. It looks backwards at last year, not at tonight’s rate. And since April 2025 it turns on the value actually charged, not the tariff printed on a card.
The GST on hotel rooms post works through how that threshold is applied year by year.
Petpooja is India’s biggest and most price effective restaurant POS, behind the success of 1,00,000+ outlets. It has run restaurant billing in India for over a decade, and processes 60 lakh bills a day at 0% error.
Can You Choose 18% to Claim Input Tax Credit?
No, and in September 2025 the Council shut the last door on trying. Here is why the option is not yours, and what the 5% rate really costs you.
Giving up input tax credit is not nothing. At 5% you absorb the GST on rent, on equipment, on packaging and on every raw material invoice, and none of it comes back.
That is why owners look at 18% and do the arithmetic.
The rate follows the premises, not the preference. The 56th GST Council put it beyond doubt.
A standalone restaurant “cannot declare itself as a ‘specified premises'”, and so “cannot avail the option of paying GST at the rate of 18% with ITC”.
Our guide to GST billing for restaurants works through that trade-off in more detail, including what the lost credit adds up to over a year.
Does GST Apply to Alcohol on a Restaurant Bill?
Alcohol for human consumption sits outside GST entirely, which is why a bar bill is harder to get right than a restaurant one.
Alcohol was kept out of GST when it came in, and it still carries state excise duty and VAT instead.
So a table that orders food and drink generates a bill with two tax regimes on it. Food carries 5% GST, the drinks carry state VAT, and the two are calculated separately and shown separately.
The VAT rate is set by your state and moves with the excise year. That is the same cycle that resets your liquor licence cost, so both change together.
This is where bar billing goes wrong most often. A single tax line across the whole bill is not a rounding problem, it is a compliance one. It shows up the moment anyone reconciles the excise return against sales.
What a Mixed Bill Actually Looks Like
The rate is easy to state and harder to apply, because one table can generate two tax regimes. This section works one bill through from the owner’s side.
Take a family at a 40-seat restaurant in Koramangala on a Friday night (an example). They order ₹2,840 of food and two beers at ₹780.
| Line | Amount | Tax treatment |
|---|---|---|
| Food | ₹2,840 | 5% GST = ₹142 |
| Beer | ₹780 | State excise and VAT, no GST |
| Bill total | ₹3,620 | Two tax lines, calculated separately |
The ₹142 goes to the government. It was never yours, even though it passed through your till.
What you cannot do is claim any of it back. The GST you paid on the rice, the gas cylinder, the rent and the chairs stays a cost. At 5% that credit is gone, and it is why a restaurant’s real tax burden is larger than the number printed on the bill.
Now run the same table through a 12% slab sitting in your item master by mistake. The food line reads ₹341 instead of ₹142. You collected ₹199 too much, you owe every rupee of it to the government, and the family who paid it left an hour ago.
How Does GST Work on Delivery App Orders?
Since January 2022 the ordering platform collects and pays the tax on the food, not you. What follows is what that moves off your books, and what stays on them.
For orders placed through an online food delivery platform, the platform is treated as the supplier and pays the 5% on the food. You still record the sale. You just do not collect that tax yourself.
The delivery fee the customer pays is a separate supply and carries its own rate. Our post on the January 2022 change covers how the responsibility moved.
What this breaks in practice is reconciliation. Your own system records a sale. The platform records the tax. The two never line up on their own.
What Is the Composition Scheme for Restaurants?
The composition scheme is a simpler way to pay for small restaurants, and it trades flexibility for less paperwork. Here is who qualifies, and what they hand over in exchange.
A restaurant with annual turnover up to ₹1.5 crore can opt in. The rate is 5% of turnover, filing drops to a quarterly statement and one annual return, and the arithmetic gets considerably simpler.
That threshold is set by notification and has moved before, so confirm the current figure on the GST portal before you opt in. Special category states run a lower limit.
What you give up matters more than what you save:
- You cannot collect GST from the customer. The 5% comes out of your own turnover.
- Your bill is a bill of supply, not a tax invoice, and it must carry the words “composition taxable person, not eligible to collect tax on supplies”.
- No input tax credit, the same as the regular 5% rate.
- No interstate outward supply, and nothing that sits outside GST, which rules out serving alcohol.
That last condition is the one that disqualifies most full-service restaurants before they get to the turnover test.
If you are weighing it up, our composition scheme calculator works the two routes side by side on your own turnover.
Five GST Errors That Show Up on Restaurant Bills
Five come up again and again, and every one of them is a setting rather than a misunderstanding. Each is below, with what it costs.
Restaurant owners using Petpooja tell us the same handful comes up, and none of them are exotic. They are configuration mistakes that nobody looks at again once the system is set up.
1. Charging 18% on Takeaway
The most expensive error here, and the most common. Anything you collect as tax has to be paid to the government, whether or not you were right to collect it.
So a counter charging 18% on parcels owes the full 18%, not the 5% it should have charged. And you cannot fix it afterwards. There is no way to return the difference to a walk-in customer who has already gone.
2. One Tax Line Across a Mixed Bill
Food and alcohol are taxed under different regimes. A bill that adds them together and applies a single percentage is wrong on both halves.
You spot it by looking for a bill where the tax works out to a clean 5% of the whole total. If the table ordered drinks, that number cannot be right.
The cost is not just the tax. It is a bar whose GST return and excise return can never be reconciled against each other, and neither will tie back to the sales report.
3. Old Slabs Still Sitting in the Item Master
The 12% and 28% slabs were abolished on 22 September 2025. Any item still carrying one is billing at a rate that no longer exists.
This bites hardest on the packaged goods a restaurant sells alongside food: bottled drinks, a branded dessert, a retail shelf at the counter. Those are goods, not restaurant service, and they carry their own rates. Our post on the new GST rates on food has the corrected list.
4. Claiming Input Tax Credit at 5%
Credit is not available at 5%, and claiming it anyway invites a notice that costs more in accountant hours than the credit was worth.
This one usually starts honestly. Somebody sets up the books, sees GST paid on purchase invoices, and treats it the way any other business would.
5. Treating a Platform Order Like a Counter Order
Tag delivery orders as a separate order type in your billing system from day one. Do it later and you are matching months of sales against a payout statement by hand.
What Happens If You Get the Rate Wrong?
Getting the rate wrong goes badly in two directions, and only one of them ever gets noticed. Both are below.
Charge less than you should have, and the shortfall is still yours to pay. Tax is due on the supply, not on what you collected. The difference comes out of your margin, with interest for the period it was late.
Charge more than you should have, and you cannot keep the extra. It goes to the government regardless of whether it was correctly charged.
The second is worse, because nothing surfaces it. Nobody queries an extra thirty rupees, so the error runs for months until an accountant finds it. Correcting it needs a credit note against every affected bill, and on a walk-in bill there is usually nobody left to refund.
Which is why the fix that matters is the item master, not the correction. Get the rate right on the next bill and the problem stops growing.
Conclusion
For almost every restaurant in India the answer is 5% without input tax credit, on dine-in, takeaway and delivery alike. The 18% rate belongs to hotels above a price point and to event catering, and it is decided by the premises rather than chosen.
The part worth acting on is not the rate itself but where it lives. Every rate sits against an individual item in your billing system, and it keeps printing whatever it was set to until somebody changes it.
Pull your item list this week and check three things:
- No item still carries 12% or 28%
- Takeaway bills at 5%, the same as dine-in
- Alcohol sits on its own tax line
Those rates live in your restaurant POS, which is where the correction belongs.
Frequently Asked Questions
Only if the menu says the prices exclude tax. If the menu shows an inclusive price, the GST is already inside it, and adding it again means the customer pays the tax twice. Whichever you choose, the menu has to say which it is.
Registration is required once turnover crosses ₹20 lakh in most states, or ₹10 lakh in the special category states. The GST registration process covers the documents and the steps.
Yes. A cloud kitchen is a standalone restaurant for GST purposes and charges 5% without input tax credit, the same as any other outlet. Having no dining room changes nothing, because the tax follows the service rather than the seating.
E-invoicing applies to B2B supplies above the turnover threshold, not to the counter bill you hand a diner. It matters for corporate and catering invoices where the customer has a GSTIN. The E-invoice explainer covers when it applies.
Service charge is not a tax and it is not collected for the government, so it is not a GST question at all. The rules around whether it can be added to a bill changed in 2022. Our post on GST on service charge covers where it stands.
The CBIC rate finder is the official lookup. Use it for the packaged goods you sell alongside food, where the rate follows the HSN code rather than the restaurant service rate.
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