GST for restaurants in India, explained for owners

For a standalone restaurant, café, sweet shop or takeaway counter, the GST rate on restaurant service is 5%. It is split as 2.5% CGST and 2.5% SGST, and you cannot claim input tax credit on what you buy. Input tax credit means setting off the GST you paid on purchases against the GST you collect. At 5% without credit, the tax you charge is a final cost for the guest and you cannot offset your purchases against it.

Here is an illustrative example. A table orders food worth Rs 1,000 before tax. At 5% the GST is Rs 50, shown as Rs 25 CGST and Rs 25 SGST, so the guest pays Rs 1,050 before any round off. The Rs 50 goes to the government, and the restaurant keeps Rs 1,000.

The big GST rationalisation of 22 September 2025, often called GST 2.0, did not change this rate for standalone restaurants. The GST Council also added explanations so that a standalone restaurant cannot declare itself a hotel-type premises to choose 18% with credit.

This guide is general information, not tax advice. Check with your CA.

Some restaurants charge 18% with input tax credit instead of 5%. This is the rule for restaurants inside specified premises, which in practice means hotels with expensive rooms. Since 1 April 2025, a premises counts as specified premises if any unit of accommodation was supplied at a value above Rs 7,500 per unit per day in the previous financial year. A premises can also be one that chose this status by declaration, or a new registrant that made the declaration.

If you run a restaurant inside a hotel, your CA will know whether your premises is covered. If you run a standalone restaurant, the 5% rate applies and you cannot switch to 18% with credit. That choice was closed by the clarification that came with GST 2.0, effective from 1 April 2025.

One more point for readers who run a hotel. From 22 September 2025, rooms with a value up to Rs 7,500 a day are taxed at 5% without credit, and rooms above Rs 7,500 stay at 18% with credit. This affects the hotel itself, so please check the details for your property with your CA.

Since 1 January 2022, the e-commerce operator pays the GST on restaurant service supplied through its platform. This is Section 9(5) of the CGST Act. For Swiggy and Zomato orders, the aggregator pays the 5% GST to the government, even if the restaurant is not registered for GST. Cloud kitchens are covered by this rule. Restaurants inside specified premises, such as hotels, are left out of it.

In plain words, you do not charge or pay GST yourself on the part of your sales that came through the aggregator. The operator no longer collects tax at source or files the older return for these supplies. Your CA decides how these sales appear in your own returns. Aggregators also charge you a commission, which is a separate matter from GST.

Orders you take on your own, such as dine-in, your QR menu, a phone call, your own website or your own riders, are not under Section 9(5). On those orders your restaurant is the supplier, so you charge the 5% yourself. This is why many owners track platform sales and direct sales separately. Our guide to zero commission online ordering covers the business side of that split.

The composition scheme is a simpler way to pay GST for small businesses. Under this scheme, restaurant service is the one service allowed. You pay 5% of your turnover (2.5% CGST and 2.5% SGST) with no input tax credit. The turnover limit is generally Rs 1.5 crore in the previous financial year, and it is lower, Rs 75 lakh, in some special-category states. Confirm the limit that applies in your state with your CA.

There are conditions. You cannot collect GST from customers, so you issue a bill of supply instead of a tax invoice. That bill must carry the words composition taxable person, not eligible to collect tax on supplies. You must also show composition taxable person on your signboard. Reading of the rules suggests that selling alcoholic liquor rules out the scheme, so ask your CA if you serve drinks.

Composition suits a small restaurant with simple purchases. It does not suit one with B2B customers who want to claim credit on your tax, because you cannot charge tax. Whether composition is right for you depends on your turnover, your state and your customers, so this is a question for your CA. If you are on composition, check with your billing software maker that it can print a bill of supply. AirQR's help pages describe tax invoices, not bills of supply, so ask AirQR support before you start.

For most restaurants, no. E-invoicing is mandatory for registered businesses whose turnover has been above Rs 5 crore in any financial year since 2017-18, effective 1 August 2023. It applies to business-to-business invoices, debit and credit notes and exports. Ordinary bills to walk-in guests without a GSTIN are business-to-consumer bills, and they are outside e-invoicing.

A dine-in or delivery bill to an unregistered customer does not need an e-invoice. A B2B invoice with a customer's GSTIN, such as for corporate catering, does need one if your turnover crosses the limit. If you are near that line, ask your CA whether your corporate bills need to be reported.

A composition restaurant issues a bill of supply, which shows the supplier's name, address and GSTIN, a serial number, the date, the recipient's details if registered, the HSN or SAC code, a description and the value of supply after discount. It shows no tax. An invoice or bill of supply need not be issued when the value is under Rs 200, subject to conditions such as the customer not asking for one.

Alcoholic liquor for human consumption is outside GST under the Constitution and Section 9(1) of the CGST Act. States tax it through VAT and excise. A bar or restaurant that sells both charges GST on the food and soft drinks and state VAT on liquor, often on the same bill. Rates and the value they apply to differ by state, so confirm yours with your accountant.

Software does not decide your GST rate. It prints what you set up, so the rate, the scheme and the treatment of liquor remain decisions for you and your CA. AirQR says the same in its own help pages, and its files are prepared to save retyping and are not tax advice.

GST rules, notifications and court decisions change. The facts here were checked against the sources below on 10 October 2026. Before you act on any of them, confirm the current position with your chartered accountant. This guide is general information, not tax advice. Check with your CA.