New GST for Food Business and Restaurants: Tax Rate on Dine-In and Takeaway
Running a restaurant, café, cloud kitchen, or any kind of food business? Then knowing the correct GST rates and tax structure is crucial for pricing, billing, and compliance. Whether it’s dine-in, takeaway, or home delivery, the GST rates differ based on how food is served and where it’s sold from.
Let’s explore the complete GST framework for the food business in India.
New GST Rate for Food Business & Restaurants in India
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for common food service scenarios (no compensation cess).
New GST Rates for Food Business – At a Glance
| Type of Food Service | New GST Rate | ITC | Remarks |
|---|---|---|---|
| Dine-in at restaurant | 5% | Not allowed | Applicable to AC & non-AC stand-alone restaurants |
| Takeaway from restaurant | 5% | Not allowed | Same as dine-in rate |
| Food delivery via Zomato/Swiggy | 5% | Not allowed | GST collected by aggregator |
| Food served in 5-star hotel | 18% | Allowed | Applies where hotel qualifies as specified premises |
| Outdoor catering services | 18% | Allowed | Standard rate with ITC |
New GST on Dine-In and Takeaway Orders
| Service Type | New GST Rate | ITC Available? |
|---|---|---|
| Dine-in | 5% | No |
| Takeaway | 5% | No |
| Room service (non-specified premises) | 5% | No |
Businesses charging 5% cannot claim ITC on inputs like ingredients, packaging, utilities, etc.
New GST for Outdoor Catering
| Service | New GST Rate | ITC Available? |
|---|---|---|
| Wedding / Event catering | 18% | Yes |
| Industrial / Commercial food service | 18% | Yes |
For composite contracts, determine the principal supply to apply the correct rate.
New GST on Packaged Food
| Product | New GST Rate | Remarks |
|---|---|---|
| Branded / packaged snacks | 5% or 18% | Items formerly at 12% move to 5%; premium/processed lines may be 18% |
| Namkeen, chips, bakery items | 5% or 18% | Depends on processing, branding & composition |
| Beverages (non-alcoholic) | 18% (most) | Aerated/specified demerit drinks may fall under 40% slab |
Structure reminder: From 22 Sep 2025, the 12% slab is discontinued (moved largely to 5%), and most former 28% packaged foods align to 18%; a narrow demerit set sits at 40%.
Old GST Rates for Food Business – At a Glance
(Old GST Rates – Applicable Until 21st September)
| Type of Food Service | Old GST Rate | ITC | Remarks |
|---|---|---|---|
| Dine-in at restaurant | 5% | Not allowed | In air-conditioned or non-AC |
| Takeaway from restaurant | 5% | Not allowed | Same as dine-in |
| Food delivery via Zomato/Swiggy | 5% | Not allowed | GST collected by aggregator |
| Food served in 5-star hotel | 18% | Allowed | If declared tariff ≥ ₹7,500 |
| Outdoor catering services | 18% | Allowed | GST with ITC allowed |
For composite contracts, determine the principal supply to apply the correct rate.
Old GST on Dine-In and Takeaway Orders
| Service Type | Old GST Rate | ITC Available? |
|---|---|---|
| Dine-in | 5% | No |
| Takeaway | 5% | No |
| Room service | 5% | No |
Businesses charging 5% cannot claim input tax credit on ingredients, packaging, or utilities.
Old GST for Outdoor Catering
| Service | Old GST Rate | ITC Available? |
|---|---|---|
| Wedding/Event catering | 18% | Yes |
| Industrial/commercial food service | 18% | Yes |
For composite contracts, determine the principal supply to apply the correct rate.
Old GST on Packaged Food
| Product | Old GST Rate |
|---|---|
| Branded/packaged snacks | 12% or 18% |
| Namkeen, chips, bakery items | 5% to 18% |
| Beverages (non-alcoholic) | 12% to 28% |
Understanding the gst for food business and restaurants is key for correct billing, profitability, and compliance. Whether you’re managing a restaurant, a food truck, or an online kitchen, applying the right GST slab helps keep your business transparent and competitive.
Old GST for Outdoor Catering
| Service | Old GST Rate | ITC Available? |
|---|---|---|
| Wedding/Event catering | 18% | Yes |
| Industrial/commercial food service | 18% | Yes |
For composite contracts, determine the principal supply to apply the correct rate.
As a Chartered Accountant with over 12 years of experience, I am not only skilled in my profession but also passionate about writing. I specialize in producing insightful content on topics like GST, accounts payable, and income tax, confidently delivering valuable information that engages and informs my audience.
Frequently Asked Questions
-
What is the GST on food business in India?Mostly 5% without ITC for restaurants and takeaways. 18% with ITC for outdoor catering or high-end hotels.
-
Do food delivery services charge GST?Yes, platforms like Zomato and Swiggy collect 5% GST on all food orders and pay it to the government.
-
Can restaurants claim input tax credit on food items?No. If charging 5%, they cannot claim ITC. Only food businesses charging 18% (like caterers) can.
-
What's the GST for packaged snacks in a restaurant?Depends on product: 5%, 12%, or 18%, based on type and branding.
-
How has GST impacted the food industry?It has simplified rates, but removal of ITC at 5% slab has increased costs for small to mid-level restaurants.