New GST for Restaurants in India: Everything You Need to Know
Quick Summary
- The new GST rate for most restaurant services in India is 5%, but it increases to 18% for services in hotels with room tariffs over ₹7,500.
- Most restaurants, including non-AC, AC, and takeaway services, cannot claim Input Tax Credit (ITC) under the new GST rules.
- Catering services at standalone venues are taxed at 5%, while those at specified premises with high room tariffs are taxed at 18% and can claim ITC.
- Restaurant services are classified under HSN Code 9963, with specific codes for different services to ensure compliance.
- Alcohol is not covered under GST, but packaged food and non-alcoholic beverages have different tax rates, with packaged food taxed at 18%.
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 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 restaurant HSN code and gst rate, and input tax credit eligibility.
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New GST Rate on Restaurant Food in India
The Government of India has updated the GST framework applicable to restaurant and catering services effective 22nd September 2025. GST on restaurant services continues to depend on the establishment type and whether the premises fall within the specified hotel category.
Below is the updated GST structure along with the earlier applicable rates for reference. No compensation cess applies to restaurant services.
GST on Restaurant and Catering Services
| Type of Restaurant / Service | GST Rate (After 22nd Sept 2025) |
GST Rate (Before 22nd Sept 2025) |
Input Tax Credit (ITC) |
|---|---|---|---|
| Non AC Restaurants | 5% | 5% | No |
| AC Restaurants | 5% | 5% | No |
| Takeaway Services (AC or Non AC) | 5% | 5% | No |
| Outdoor Catering Services (standalone) | 5% | 18% | No |
| Outdoor Catering at specified premises | 18% | 18% | Yes |
| Restaurants in hotels with room tariff above ₹7,500 | 18% | 18% | Yes |
Important Clarification
Specified premises refer to hotels where the declared room tariff of any room exceeds ₹7,500 per night. In such cases, restaurant and catering services provided within those premises attract 18% GST with Input Tax Credit.
In all other regular restaurant cases, GST is charged at 5% without Input Tax Credit.
What This Means for Customers
If you dine at a regular restaurant, whether air conditioned or not, GST remains at 5%.
If you order takeaway from a restaurant, GST is also 5%.
If catering services are provided at a hotel classified as a specified premise, GST is charged at 18% with Input Tax Credit available to the service provider..
(After 22nd Sept 2025) 5%
(Before 22nd Sept 2025) 5%
(ITC) No
(After 22nd Sept 2025) 5%
(Before 22nd Sept 2025) 5%
(ITC) No
(After 22nd Sept 2025) 5%
(Before 22nd Sept 2025) 5%
(ITC) No
(After 22nd Sept 2025) 5%
(Before 22nd Sept 2025) 18%
(ITC) No
(After 22nd Sept 2025) 18%
(Before 22nd Sept 2025) 18%
(ITC) Yes
(After 22nd Sept 2025) 18%
(Before 22nd Sept 2025) 18%
(ITC) Yes
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 Restaurant 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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How to Calculate GST on Restaurant Bills
GST on restaurant services is calculated on the total food and beverage value before adding GST.
Example 1: Regular Restaurant at 5% GST
If your food bill is ₹2,000:
GST = 5% of ₹2,000
GST = ₹100
Total payable amount = ₹2,100
There is no Input Tax Credit benefit to the restaurant in this case.
Example 2: Restaurant in Specified Hotel at 18% GST
If you dine at a restaurant located in a hotel where the room tariff exceeds ₹7,500 and your bill is ₹2,000:
GST = 18% of ₹2,000
GST = ₹360
Total payable amount = ₹2,360
In this case, the restaurant can claim Input Tax Credit.
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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!
