New 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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New GST Rate on Restaurant in India
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for restaurant and catering services (no compensation cess).
| Type of Restaurant | New 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 (standalone) | 5% | No |
| Outdoor Catering at specified premises (hotel room tariff > ₹7,500) | 18% | Yes |
| Restaurants in hotels with room tariff > ₹7,500 | 18% | Yes |
Note: “Specified premises” refers to hotels where the declared room tariff of any unit exceeds ₹7,500 per night; such premises attract 18% with ITC for restaurant/catering services. Otherwise, 5% without ITC applies.
Old 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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- 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!
As a Chartered Accountant with over 18 years of experience, I have honed my skills in the field and developed a genuine passion for writing. I specialize in crafting insightful content on topics such as GST, income tax, audits, and accounts payable. By focusing on delivering information that is both engaging and informative, my aim is to share valuable insights that resonate with readers.
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.
