Food & HospitalitySAC 9963

GST on Restaurants & Food Services — Rates, ITC & Compliance

Complete guide to GST on restaurants, cloud kitchens, food delivery platforms, outdoor catering, and hotels. Understand the 5% vs 18% distinction, ITC restrictions, e-commerce platform collection, and composition scheme for food businesses.

5%

Restaurant (Non-AC)

5%

Restaurant (AC)

5%

Cloud Kitchen

18%

Outdoor Catering

5%

Star Hotels (≤₹7,500)

18%

Star Hotels (>₹7,500)

No*

ITC Available

5%

Composition Rate

GST Provisions for Food & Hospitality

Standalone Restaurants — 5% Without ITC

All standalone restaurants (AC, non-AC, takeaway) pay 5% GST without Input Tax Credit. This applies to dine-in, takeaway, and home delivery. Prior to Nov 2017, AC restaurants paid 18% with ITC; the 23rd Council meeting simplified this to a flat 5%.

Cloud Kitchens & Food Delivery

Cloud kitchens (delivery-only restaurants) are classified as restaurants and pay 5% GST without ITC. Food delivery platforms (Zomato, Swiggy) collect and deposit GST at 5% on behalf of restaurants since January 2022 — the restaurant liability shifted to the platform.

Hotels & Lodging with Food

Hotels with room tariff ≤₹7,500: restaurant services at 5% without ITC. Hotels with room tariff >₹7,500: restaurant services at 18% with ITC. If food is part of room tariff (bundled), the accommodation rate applies (12% or 18% depending on tariff).

Outdoor Catering Services — 18%

Outdoor catering (events, weddings, corporate functions) attracts 18% GST with full ITC. This is classified as a supply of service, not restaurant service. Indoor catering at restaurants remains at 5%. The distinction is based on location: restaurant premises = 5%, client premises = 18%.

Packaged Food Products

Pre-packaged and labelled food: Namkeen/snacks at 12%, chocolates at 18%, ice cream at 18%, biscuits at 18%, instant food at 18%. Unbranded staples (rice, wheat, pulses) were exempt but pre-packed versions attract 5% from July 2022 (47th Council decision).

Composition Scheme for Restaurants

Restaurants with turnover ≤₹1.5 crore can opt for Composition Scheme and pay flat 5% GST (2.5% CGST + 2.5% SGST) without ITC. No inter-state supply allowed. Simpler compliance — quarterly returns instead of monthly. Cannot supply through e-commerce.

GST Rate Matrix — Restaurants & Food Services

Service TypeGST RateITCSAC
Standalone restaurant (any type)5%No9963
Cloud kitchen / delivery-only5%No9963
Takeaway / home delivery5%No9963
Canteen (educational/industrial)5%No9963
Hotels (room tariff ≤₹7,500)5%No9963
Hotels (room tariff >₹7,500)18%Yes9963
Outdoor catering / events18%Yes9963
Indian Railways / IRCTC food5%No9963
Food via e-commerce (Zomato etc.)5%No (platform collects)9963
Sweetmeats / mithai shops5%No9963

Frequently Asked Questions

What is the GST rate on restaurant food?
All restaurant food (dine-in, takeaway, delivery) is taxed at 5% GST without Input Tax Credit, regardless of whether the restaurant is AC or non-AC. This uniform 5% rate was introduced from November 15, 2017 by the 23rd GST Council meeting. Previously, AC restaurants charged 18% with ITC.
Do Zomato and Swiggy charge GST on food delivery?
Yes, since January 1, 2022, food delivery platforms like Zomato and Swiggy collect and deposit 5% GST on restaurant food orders. The tax liability shifted from the restaurant to the platform for all orders placed through the app. The rate remains the same 5% — only the collection responsibility changed.
What is the difference between restaurant service and outdoor catering?
Restaurant service (5% without ITC) means food served at the restaurant premises or delivered from it. Outdoor catering (18% with ITC) means food preparation and service at the client's premises — wedding venues, corporate offices, event halls. The distinction is purely based on where the food is served, not the type of food.
Can restaurants claim Input Tax Credit?
Restaurants paying 5% GST CANNOT claim ITC on their purchases (raw materials, rent, equipment). Only restaurants in hotels with room tariff >₹7,500 (paying 18%) and outdoor caterers (paying 18%) can claim full ITC. The no-ITC condition was introduced to prevent rate arbitrage and simplify compliance.

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