GST for Restaurants in India: Everything You Need to Know

Eating out or ordering food online is a big part of life in modern India. But have you ever checked your restaurant bill and wondered what that extra tax is? That’s GST—Goods and Services Tax—added to your food bill. In this article, we’ll explain how GST applies to restaurants, whether dining in, ordering online, or even catering services. We’ll also discuss HSN codes, tax rates, and input tax credit eligibility.

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    GST Rates

    GST Rates for Restaurants: A Quick Breakdown

    Restaurant services are taxed at either 5% or 18%, depending on the type of establishment and whether Input Tax Credit (ITC) is available.

    Type of Restaurant GST Rate Input Tax Credit (ITC)
    Non-AC Restaurants 5% No
    AC Restaurants 5% No
    Takeaway Services (AC/Non-AC) 5% No
    Outdoor Catering Services 18% Yes
    Restaurants in 5-star hotels (room tariff > ₹7,500) 18% Yes

    So, if you dine in at a regular restaurant—AC or not—you pay 5% GST. But if you hire catering for an event, the GST jumps to 18%.

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    HSN Code for Restaurant Services

    Restaurant and catering services are categorized under HSN Code 9963. Specific sub-codes help identify the type of service.

    Service Description HSN Code GST Rate
    Restaurant services 996331 5% / 18%
    Outdoor catering services 996333 18%

    These codes are used on bills, and GST returns for compliance and clarity.

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    Input Tax Credit (ITC): Who Can Claim It?

    Restaurants:
    • Most restaurants (except 5-star hotel restaurants and catering services) cannot claim ITC.
    • This was done to keep food affordable and avoid complex ITC structures for small restaurant owners.
    Businesses:
    • If your company hires a catering service for a corporate event or employee meals, you may be able to claim ITC, provided you meet the conditions under GST law.

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    GST on Food vs GST on Services

    • Food served in a restaurant (prepared and served): 5%
    • Packaged food sold in a restaurant (like bottled water, chips): 18%
    • Beverages like soft drinks or alcohol: Varies — 18% for non-alcoholic beverages; alcohol is not covered under GST

    So, next time you see multiple tax lines on your bill, know they’re being applied based on the item, not just the service.

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    Unique Features of BUSY Accounting Software For the Restaurants Industry

    • Fast billing with table-wise order management.
    • Multi-mode payment support (cash, card, UPI, wallet).
    • Inventory tracking for raw materials and ingredients.
    • Daily sales reports and item-wise profitability analysis.
    • Multiple outlet management with centralized control.

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    Final Thoughts

    Whether you’re grabbing a bite at your favourite café, ordering food online, or booking catering for a party, GST plays a part in your final bill. While most restaurants charge 5% GST(Goods and Services Tax), services like catering and 5-star hotel dining fall under the 18% bracket. Understanding these differences helps you read your bill with clarity—and maybe even plan smarter meals out!

    Frequently Asked Questions (FAQs)

    • What is the GST rate on restaurant food?
      The GST rate is 5% without input tax credit for most restaurants, including dine-in and takeaway.
    • Why can’t restaurants claim ITC?
      The government restricted ITC to avoid misuse and to keep food prices lower for consumers.
    • Is GST different for dining in and ordering online?
      No. Both dine-in and online orders are taxed at 5%, though online platforms collect and remit it directly.
    • What about catering services?
      Catering services are taxed at 18% GST and are eligible for ITC.
    • Does GST apply to alcohol served in restaurants?
      No. Alcohol is not covered under GST. State excise taxes apply instead.
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