GST on Restaurant Food 2026: Rates & Rules Explained

TL;DR

GST rate on restaurant food is 5% for almost all restaurants in India, AC or non-AC, dine-in or takeaway. GST is calculated on the total bill, including any service charge levied. At 5% GST, restaurants cannot claim Input Tax Credit (ITC) on any purchases of raw materials, packaging, equipment, or utilities. Only restaurants inside hotels with a room tariff above ₹7,500 per night pay 18% GST and can claim ITC. On Zomato and Swiggy orders, the platform collects and pays the 5% GST, not the restaurant. But you still need to report those sales in your GSTR-3B. Cloud kitchens are taxed exactly like restaurants: 5% GST, no ITC. If you sell through any delivery app, GST registration is mandatory. Small restaurants and dhabas with turnover below ₹20 lakh don’t need to register unless they’re on a delivery platform. Regular scheme restaurants file GSTR-1 and GSTR-3B monthly. Composition scheme restaurants file CMP-08 quarterly and GSTR-4 annually.

GST on restaurant food is a flat 5% for almost all restaurants in India — dine-in, takeaway, AC, non-AC, and cloud kitchens — but with no Input Tax Credit allowed on any purchases, making the effective cost burden higher than the headline rate suggests. The only exception is restaurants inside hotels with a room tariff of ₹7,500 or more per night, which pay 18% GST but can claim ITC. For Zomato and Swiggy orders, the platform pays the 5% GST on food and 18% on the delivery fee — but restaurants must still report these sales in their GSTR-3B.

The GST rate on restaurant food in India shifts based on where the restaurant operates, how food reaches the customer, and whether it’s a standalone outlet or part of a hotel.

Most restaurant owners and food business operators, especially those new in the field, get at least part of this wrong. The errors lead to incorrect billing, ITC claims that attract notices, or GST return mismatch.

In this guide, we breakdown GST implications for food businesses. We cover dine-in and takeaway GST rates, the AC/ non-AC rule change, how Zomato and Swiggy handle GST, cloud kitchen compliance, and more.

The One Thing Most Restaurant Owners Get Wrong About GST

The current GST rate on restaurant food is 5% for all standalone restaurants in India whether they are AC or non-AC.

Most restaurant owners underestimate what the 5% GST actually costs.

You collect that 5%, pay it to the government every month, and move on. But at this rate you cannot claim Input Tax Credit (ITC) on any of your business expenses.

Every rupee of GST you pay on raw materials, packaging, rent, kitchen equipment, or professional services becomes an irreversible cost. It does not get adjusted against your output tax liability. You simply absorb it.

Example:

You run a mid-sized restaurant with monthly revenue of ₹10 lakh.

GST collected from customers (5%): ₹50,000
GST paid to suppliers: ₹40,000

In a normal GST system, you would claim ITC and pay:

GST payable to government = ₹50,000 – ₹40,000 = ₹10,000

Under the 5% restaurant GST regime (No ITC), you cannot claim ITC.

So you pay ₹50,000 to the government, while the ₹40,000 paid to suppliers becomes a cost

This means:

₹40,000 directly hits your margins every month. Many owners discover this only after filing their first few GST returns. By then, the damage is already done to their margins

Implications:

Structure your pricing to account for the fact that ITC is not available
Verify whether your restaurant qualifies for any category where ITC is allowed
Never assume that a lower GST rate automatically means lower overall tax outgo. The effective cost of the no-ITC rule often outweighs the benefit of a lower headline rate, especially for businesses with high procurement volumes.

Another confusion is about if there is only one rate applicable to all types of restaurants. Here’s a quick reference:

Type of Restaurant/Delivery	GST Rate
Standalone restaurants (AC/non-AC), including takeaway/parcel	5% without ITC
Restaurants in hotels (room tariff < ₹7,500/night), including outdoor catering	5% without ITC
Restaurants in hotels (room tariff ≥ ₹7,500/night), including outdoor catering	18% with ITC
Delivery through apps (e.g., Swiggy/Zomato)	5% without ITC on food + 18% GST on delivery fee
Indian Railways/IRCTC food/catering services	5% without ITC

Also to consider is service charge & GST. If a restaurant levies a service charge, GST is calculated on the total bill including the service charge.

So if the food bill is ₹1,000 and service charge is ₹100, GST of 5% applies on ₹1,100, not ₹1,000.

As a business owner, you must get these fundamentals right. Incorrect GST rates on invoices can trigger demand notices, interest, and penalties under the CGST Act.

Dine-In GST Rate — AC vs Non-AC (Post-2018 Change)

When GST was launched in July 2017, restaurants were taxed on a split structure: 12% for non-AC outlets and 18% for AC restaurants or those serving liquor.

The GST Council scrapped the AC vs non‑AC distinction for standalone restaurants in November 2017.

Any standalone restaurant, whether AC, non‑AC, or serving alcohol, must charge a flat 5% GST on the food bill, but without ITC.

Here’s the current rate structure:

Restaurant Type	GST Rate	ITC Allowed?
Standalone restaurant (AC or non-AC)	5%	No
Restaurant in hotel (room tariff ≤ ₹7,500/night)	5%	No
Restaurant in hotel (room tariff > ₹7,500/night)	18%	Yes

The 5% is split as 2.5% CGST + 2.5% SGST on intra-state transactions.

For hotels with room rent of ₹7,500 or more per night, its restaurant automatically moves to the 18% slab. Here, you can claim ITC on your purchases.

For high‑end hotel restaurants, the higher rate is actually a trade‑off for that credit.

Points to Remember:

You cannot voluntarily switch to 18% to claim ITC unless you qualify under the hotel tariff criteria
Charging 18% without being in a ₹7,500+ tariff hotel is a compliance violation that will show up in audits
Restaurant services fall under SAC code 9963 ensure this appears correctly on all invoices and GST returns
The 5% applies equally to cafes, quick service restaurants, sweet shops, bakeries, and similar food service outlets, not just sit-down restaurants

If you operate a hotel-attached restaurant, check your room tariff structure carefully. If your hotel crosses the ₹7,500 threshold, even seasonally or for certain room categories, the GST rate for the restaurant changes to 18% with ITC available.

Impact of the 2025 GST Changes

Following the 55th GST Council meeting, effective April 1, 2025, restaurants in hotels with room tariff exceeding ₹7,500 per day qualify as “specified premises” and can choose between 5% GST without ITC or 18% with ITC via a declaration on the GST portal.

Hotels must declare the option before the financial year starts or at registration. This option remains valid until opted out, with separate declarations per premises.

Standalone restaurants (non-hotel) remain locked at 5% without ITC.

What This Means for Your Dine‑In Business

As a standalone restaurant, you don’t need to worry about the 5% GST, what you need to understand is the tax burden.

Your effective tax burden is higher than 5% because of the blocked ITC. Factor that into your pricing. Many owners set menu prices assuming their tax cost is exactly 5%. It is not. Their real tax cost includes every rupee of GST paid upstream.

If your restaurant is inside a hotel, do not default to the 5% rate.

High input costs (e.g., ingredients, utilities) make 18% + ITC beneficial, as net tax could be lower than 5% flat.

Run calculations like: Net GST = 18% on output minus eligible ITC on inputs. This calculation and choice could save you lakhs annually.

Takeaway & Parcel Orders — Same Rate or Different?

Takeaway and parcel orders attract the same GST rate as dine‑in. Most standalone restaurants in India charge 5% GST on food whether you eat it there or carry it out.

This covers:

Counter pickups
Parcel orders at the outlet
Direct home delivery by the restaurant (not through Zomato or Swiggy)

This is because, under GST, takeaway and parcel orders are classified as restaurant services, not as a sale of goods.

If a customer walks in, orders biryani, pays, and walks out with a parcel, the transaction is still treated as a supply of service. The preparation, cooking, and packaging are all part of the restaurant service.

The presence of packaging or the fact that the customer did not sit down does not change the nature of the supply.

Where confusion enters is with packaging charges. If packaging costs are bundled into the food price, they’re taxed at the same 5% rate as the food.

If packaging is separately invoiced: specific containers, insulated bags, branded boxes, the applicable GST rate is determined by the product category, which can be 12% or 18% depending on the material.

For orders placed through aggregator platforms, the tax mechanics shift entirely. We’ll cover it up ahead.

But for any order where your restaurant receives payment directly: in person, over the phone, through your own website, the 5% rule applies, and you are responsible for collecting and remitting that tax.

A Compliance Point Many Restaurants Overlook:

Every GST-registered food business must issue a valid tax invoice even for takeaway orders. No exceptions.

That means the invoice must carry:

GSTIN
Sequential invoice number
Date
HSN/SAC code (9963 for restaurant services)
Applicable rate
Tax amount

Informal receipts, handwritten bills without tax breakdowns, or no bill at all, these are compliance violations for registered businesses.

If you run a counter-service or fast food outlet with high takeaway volumes, ensure your billing or point‑of‑sale (POS) system generates compliant invoices automatically.

Manual billing at scale is both time-consuming and error-prone. A GST notice triggered by invoice non-compliance is not really worth the compliance shortcut.

Also, your POS system should treat dine‑in and takeaway identically for GST purposes.

Use the same HSN/SAC code for both (SAC 9963 for restaurant services). Do not create separate tax categories for parcel orders.

Misclassification, even unintentional, reflects in your GSTR‑1 and can trigger reconciliation mismatches.

GST on Zomato & Swiggy — Who Pays: You or the App?

As a restaurant supplying through Zomato or Swiggy, you do not pay GST on the food. The aggregator pays it on your behalf.

From January 1, 2022, Zomato and Swiggy were brought under Section 9(5) of the CGST Act as e-commerce operators (ECOs) for restaurant food delivery.

This means the obligation to collect and deposit 5% GST on food orders placed through their platforms rests with the aggregator, not the restaurant.

When a customer orders through Zomato or Swiggy, the platform collects GST from the customer and deposits it directly with the government. The restaurant neither collects nor pays GST on those specific orders.

What the Aggregator Covers

Through the platform, two distinct services are provided to the customer:

Supply of food: The restaurant prepares and packages the meal.
Delivery service: The platform arranges for the food to be picked up and dropped off.

Component	GST Rate	Who Collects from Customer	Who Pays to Government
Food value (say ₹200)	5%	Zomato/Swiggy	Zomato/Swiggy
Delivery fee (say ₹30)	18%	Zomato/Swiggy	Zomato/Swiggy
Total Customer Bill	₹255.90	Platform	Platform

Pre-September 2025, the aggregator was responsible only for GST on the restaurant’s supply under Section 9(5) of the CGST Act.

From September 2025, the CBIC clarified that local delivery services provided by e-commerce operators will also attract 18% GST.

So, the customer pays two taxes on their bill:

5% GST on the food value (collected by the platform)
18% GST on the delivery fee (also collected by the platform)

The food aggregator pays both taxes to the government. You, as the restaurant, do nothing.

Your Invoice and Reporting Obligations

Even though the platform pays the GST, as a business, you must

Be GST registered, mandatory for a business listed on any e-commerce food delivery platform.
Issue a tax invoice for the full value of the food supply with 0% GST to either the aggregator or the customer, depending on your aggregator’s terms.
Not charge or collect GST on aggregator-platform orders
Report these sales in your GSTR-3B under Table 3.1.1(ii), this section is specifically for supplies made through ECOs where the operator is liable to pay tax
Failure to report these sales in your GSTR-3B, even though you didn’t collect the tax, is a filing gap the GST department will catch

You cannot recover commission cost:

Zomato and Swiggy charge a commission ranging from 15% to 30% of the order value for listing and delivery services.

This commission is taxed at 18% GST, billed by the platform to the restaurant. Since you’re operating under 5% GST without ITC, you cannot claim credit on this 18% commission GST. It’s a direct operational cost that impacts margins on every platform order.

Reconcile your monthly aggregator settlement statements with your GSTR-3B before filing.

Discrepancies between aggregator-reported data and your declared figures are one of the more common audit triggers for restaurant businesses.

Cloud Kitchen GST — How It Works for Ghost Restaurants

A cloud kitchen, whether you call it a ghost kitchen, dark kitchen, or virtual restaurant, is just a kitchen setup designed exclusively for delivery and takeaway. No dining area. No waitstaff. No physical footfall.

But under Indian GST law, services provided by way of cooking and supply of food by cloud kitchens are covered under “restaurant service” and attract the same GST rate as a normal restaurant.

From a GST perspective:

No separate category exists: The law does not differentiate between a cloud kitchen and a traditional restaurant. Both fall under SAC code 9963 (restaurant services).
Rate: 5% GST without ITC, applicable to all food supplies , delivery or takeaway.
No physical presence requirement: You can run your cloud kitchen from a rented commercial space, a shared kitchen facility, or even a designated area in your existing restaurant.
Multiple brands, one kitchen: Many aggregators run multiple virtual brands from the same kitchen. GST registration is required for each legal entity, but not separately for each brand.
Registration: Cloud kitchens operating through Zomato or Swiggy must register from the very first transaction. No turnover exemption. This is a hard requirement under the CGST Act, and it catches first-time operators off guard regularly.

If you’re running a home-based cloud kitchen selling through an aggregator, the same rule applies.

Here’s a summary of the cloud kitchen GST applicable rates under current law:

Transaction/Scenario	Order Type	GST Rate	Who Pays to Government
Customer orders directly from your website/app	Food + delivery	5%	The cloud kitchen
Customer orders through Zomato/Swiggy	Food	5%	Zomato/Swiggy
Customer orders through Zomato/Swiggy	Delivery charge	18%	Zomato/Swiggy

Input Tax Credit (ITC) Claim on Cloud Kitchen Expenses

Since cloud kitchens operate at 5% GST, no ITC is available.

That means every GST rupee you pay on the following becomes a permanent cost:

Raw materials (vegetables, spices, dairy, meat, flour)
Packaging materials (boxes, containers, cutlery, bags)
Kitchen equipment (ovens, fryers, refrigerators, mixers)
Rent for your kitchen premises
Professional services (accounting, legal, consulting)
Aggregator commissions (you pay 18% GST on the commission amount)

Multi-brand operations:

Many cloud kitchen operators run multiple virtual brands from one physical kitchen. You don’t need a separate GST registration for each brand.

The turnover from all brands at one location is aggregated for registration purposes.

Returns and reconciliation:

Cloud kitchens under the regular scheme file GSTR-1 and GSTR-3B monthly. Invoices must carry SAC code 9963. Every month, cross-check aggregator settlement statements against your GSTR-3B figures.

Orders where Zomato or Swiggy paid the GST must appear in Table 3.1.1(ii) of your GSTR-3B. Direct orders, through your own platform, WhatsApp, or phone, are reported separately, with 5% GST collected and remitted by you.

Can Restaurants Claim ITC on Raw Materials?

No. If your restaurant charges the standard 5% GST on food, you cannot claim Input Tax Credit (ITC) on raw materials, kitchen equipment, rent, packaging, or any other business expense.

Under Section 17(5) of the CGST Act, ITC is blocked for restaurant services taxed at 5%. This restriction is explicit and covers a broad range of inputs.

What ITC you cannot claim as a 5% restaurant:

Food raw materials including vegetables, grains, dairy, meat, spices, oils
Packaged ingredients and condiments
Packaging materials like containers, boxes, carry bags
Commercial cooking gas
Kitchen equipment and appliances
Crockery, cutlery, and serving ware
Furniture, fixtures, and interiors
Commercial utility bills such as electricity, water
Professional fees like accounting, legal, consulting services

All GST paid on these purchases becomes a sunk cost. It cannot be offset against the 5% GST you collect from customers.

Can Any Restaurant Claim ITC? Yes

There are exactly two scenarios where your restaurant can claim ITC on raw materials:

Hotels with high room tariffs: If your restaurant is inside a hotel where the declared room tariff is ₹7,500 or more per night, you must charge an 18% GST. You can claim ITC on all raw materials, equipment, and other inputs.
Outdoor catering businesses: They can charge 18% rate on GST and are also eligible to claim ITC.

Example of How Blocked ITC Affects Your Business

Let’s compare 5% GST without ITC with 18% GST with ITC assuming both businesses have the same numbers for raw material purchases and sales.

Action	Standalone Restaurant (5%, No ITC)	Hotel Restaurant (18%, ITC Allowed)
Purchase raw materials (value ₹1,00,000)	₹1,00,000	₹1,00,000
GST paid to supplier @ 5%	₹5,000	₹5,000
Total cash outflow to supplier	₹1,05,000	₹1,05,000
Sale to customers (value ₹6,00,000)	₹6,00,000	₹6,00,000
GST collected from customers	₹30,000 (5% of ₹6L)	₹1,08,000 (18% of ₹6L)
Amount you deposit with the government	₹30,000	₹1,03,000 (after deducting ITC)*
Final money lost	The ₹5,000 GST paid to supplier is gone forever	Entire ₹1,05,000 paid to supplier is recovered from the customer

The standalone restaurant lost ₹5,000. The hotel restaurant lost nothing on raw material GST. This ₹5,000 difference is pure cash loss for you.

Composition Scheme for small operators:

Restaurants with annual turnover up to ₹1.5 crore can opt for the Composition Scheme, paying a flat 5% on total turnover quarterly. The benefit is simplified filing, quarterly CMP-08 statements instead of monthly GSTR-1 and GSTR-3B.

Key trade-offs: no ITC, no tax invoices issued to customers, no interstate supplies, and no sales through e-commerce platforms. Restaurants that also serve alcohol are ineligible.

GST Return Filing for Food Businesses

Once you have registered your food business under GST, next is to follow the return filing properly and on time.

Regular scheme restaurants file these primary returns:

Return	Purpose	Due Date
GSTR-1	Outward supply details (sales invoices)	11th of following month
GSTR-3B	Summary return + tax payment	20th of following month
GSTR-9	Annual consolidated return	31st December of the following FY

Restaurants with annual turnover below ₹5 crore can opt for the Quarterly Return Monthly Payment (QRMP) scheme.

Under this scheme, you can file GSTR‑1 and GSTR‑3B on a quarterly basis, while tax liability is discharged monthly through PMT‑06 challans based on self‑computed tax for each month.

This reduces the filing frequency but does not reduce the overall tax payment obligation.

Businesses with a turnover above ₹5 crore must also generate e-invoices through the Invoice Registration Portal (IRP).

Composition scheme restaurants have a simpler filing calendar:

Return	Purpose	Due Date
CMP-08	Quarterly tax payment statement	18th of month following the quarter
GSTR-4	Annual return	30th June of the following FY

Penalties for late filing:

GSTR-1 and GSTR-3B: ₹50 per day (₹25 CGST + ₹25 SGST).
The maximum late fee per return is capped at ₹10,000.
18% interest per annum on any unpaid tax amount
Even if you had zero sales, you must file a Nil return. Ignoring this triggers late fees of ₹20 per day.

Platform sales, the GSTR-3B reporting requirement:

Orders fulfilled through Zomato or Swiggy, where the aggregator pays the GST, must still appear in your GSTR-3B under Table 3.1.1(ii).

Omitting it creates a discrepancy between what the aggregator reports and what you declare.

Multi-state and multi-outlet operations:

Each state where you operate requires a separate GSTIN. Returns are filed state-wise.

From 2025, the ISD (Input Service Distributor) mechanism became mandatory for restaurant chains with multiple outlets needing to distribute shared input service credits, for instance, credits on head office marketing or consultancy expenses.

Chains that haven’t configured this correctly may have accumulated mismatches across their GSTINs.

Monthly reconciliation between your sales data, aggregator settlement statements, and GSTR-1 figures is essential before filing GSTR-3B. Catching a mismatch before filing is a one-minute correction. Catching it after a demand notice is weeks of documentation.

PKC Tax Advisory for Hospitality Businesses

Running a restaurant is challenging enough without the added complexity of GST classifications, blocked credits, and filing deadlines.

For restaurant businesses, GST compliance can become more complicated than expected especially with delivery platforms, multi-outlet operations, and hotel-attached dining involved.

Even a small error in tax rates, ITC claims, or aggregator reporting can lead to notices, interest, and penalties.

That’s where PKC Management Consulting comes in. Backed by 32+ years of experience, 1,300+ clients, and a team of 150+ professionals, PKC understands the unique financial and compliance challenges of the hospitality industry and helps restaurants stay compliant with confidence.

For restaurant and food businesses, our’s GST advisory covers:

GST registration including mandatory cloud kitchen and aggregator-listed restaurant registration
Rate classification: dine-in, takeaway, catering, hotel restaurant, cloud kitchen
Return filing, accurate GSTR-1, GSTR-3B, GSTR-4, CMP-08, and annual return compliance
ITC compliance identifying wrongly claimed credits and correcting them before audit exposure
Section 9(5) compliance, proper GSTR-3B reporting of Zomato and Swiggy platform sales
Audit and litigation support: GST scrutiny, departmental audits, and demand notice responses
Multi-outlet chain compliance: state-wise GSTIN management and ISD configuration

Beyond GST compliance, PKC also assists with strategic financial planning. We help with income tax advisory, transfer pricing, internal audits, ERP implementation, and business process consulting.

Whether you are opening a second outlet or pivoting your model to focus on delivery, having a tax partner who knows the pinch points of the restaurant business is invaluable.

Frequently Asked Questions

Q1. Is GST different for AC and non-AC restaurants in 2026?

No. The AC vs. non-AC distinction was removed in November 2019. All standalone restaurants pay 5% GST without ITC. The only exception is restaurants inside hotels where the room tariff is equal to or exceeds ₹7,500 per night. These attract 18% GST with ITC available.

Q2. Who pays GST on Zomato/Swiggy food delivery?

The aggregator deposits the GST to the government. From January 1, 2022, Zomato and Swiggy collect and deposit 5% GST on platform orders under Section 9(5) of the CGST Act. The restaurant must still report these sales in GSTR-3B under Table 3.1.1(ii), even though the tax is paid by the platform.

Q3. Can a restaurant claim ITC on vegetables and raw materials?

No. Under Section 17(5) of the CGST Act, ITC is blocked for restaurants under the 5% GST rate. GST paid on all inputs including raw materials, packaging, kitchen equipment, and utilities cannot be offset against GST collected from customers.

Q4. What GST rate applies to a cloud kitchen?

5% without ITC, the same as a standalone restaurant. A cloud kitchen is classified as a restaurant service under GST regardless of the absence of dine-in seating. GST registration is mandatory from the first transaction if the kitchen sells through Zomato, Swiggy, or any e-commerce platform.

Q5. What GST return does a restaurant owner file?

Under the regular scheme: GSTR-1 (outward sales details) and GSTR-3B (summary + tax payment), monthly or quarterly depending on turnover. Under the Composition Scheme: CMP-08 quarterly and GSTR-4 annually.

Q6. Does a tea stall or small dhaba need GST registration?

Only if annual turnover exceeds ₹20 lakh (₹10 lakh in special category states). Most small dhabas and tea stalls fall below this and are exempt. The exception is when they sell through Zomato or Swiggy, registration is mandatory from the first day regardless of turnover.

Q7. Is GST charged on a restaurant’s service charge?

Yes. If a restaurant levies a service charge, GST is calculated on the total bill including service charge amount. Service charge itself is discretionary and not mandatory under consumer protection guidelines, but any amount levied forms part of the taxable value for GST purposes.