Goods and Services Tax (GST) is the indirect tax that has replaced various other indirect taxes imposed on several food items and restaurant services in India. The Parliament of India passed the Goods and Service Tax Act on 29 March 2017, which was brought into effect on 1 July 2017.
In India, the Goods and Services Tax, GST on food items and GST on restaurant food varies depending on where you eat and what type of food service you’re using. GST on food items in India can be 5%, 12%, or 18% based on factors such as the establishment type and location of restaurants or food service providers.
GST on food and restaurant services has replaced the old VAT (Value Added Tax) and Service Tax . However, the service charge you pay at a restaurant is not the same as GST; it’s separate.
When it comes to alcoholic drinks, alcoholic liquor is liable to be taxed @ 18% GST. However, GST on alcohol is not charged. State-level VAT in charged on Alcohol.
Restaurant Bills Before GST Implementation
- VAT: Applied to the food portion of the bill.
- Service Tax: Tax on the services provided by the restaurant.
- Service Charge: Additional charge by the restaurant, not a tax.
Under the VAT system, different items on the menu were taxed at different rates, complicating the billing process. GST rates on food aimed to standardise this by replacing multiple taxes with a single tax rate applicable to the entire bill.
What were the Original GST Rules for Restaurants?
When the GST was first launched in July 2017, restaurants could fall into three different rate slabs. If the restaurant did not have air conditioning, the GST charged was 12%. For a restaurant with AC or a liquor license, 18% GST is applicable. For restaurants within five-star hotels, the GST rate was set at 28%, and at that time, all Indian restaurants in India could take advantage of the input tax credit.
This implies that when you paid GST while buying supplies for your restaurant, you could subtract that amount from your tax bill. That helped reduce costs for many restaurants.
GST rates on Food, Beverage Services, and Accommodation
| Description | Applicable GST Rate |
| Food services provided by restaurants including takeaway facility (both air-conditioned and non-a/c) | 5% with No ITC |
| Any food/drink served at cafeteria/canteen/mess operating on a contract basis in the office, industrial unit, or by any school, college, etc on basis of a contractual agreement that is not event-based or occasional | 5% with No ITC |
| Services provided by restaurants within a hotel with a room tariff of less than Rs. 7,500 | 5% with No ITC |
| Services provided by restaurants within a hotel with a room tariff of Rs. 7,500 or more | 18% |
| Meals/food services provided by Indian Railways/IRCTC or their licensees both in trains or at platforms | 5% with No ITC |
| Food services provided on a premise arranged for organizing function along with renting of such premises | 18% |
| Food services provided at exhibitions, events, conferences, and outdoor & indoor functions that are event-based or occasional in nature | 18% |
| Other Accommodation, food, and beverage services | 18% |
Note: Then rates given in the list are subject to periodic change
GST on Food items
| Description | Applicable GST Rate |
| GST on fresh/chilled vegetables such as potatoes, onions, garlic, leek, etc. | Nil |
| GST on non-container dried leguminous packed vegetables(shelled) whether skinned/split or not | NIL |
| GST on fruits such as fresh grapes, fresh/dried coconut, fresh/dried bananas/plantain, fresh apples, fresh pears, etc. | Nil |
| GST on non-veg items such as meat (not in a container, whether fresh or chilled) | Nil |
| GST on eggs in the shell (fresh/cooked/preserved) | Nil |
| GST on unsweetened milk (pasteurized/unpasteurized), cream, etc. | Nil |
| GST on container packed vegetables (uncooked/steamed/boiled) | Nil |
| GST on vegetables preserved using brine/other means unsuitable for immediate human consumption | Nil |
| GST on meat packed in a container having a registered trademark or brand name | 5% |
| GST on eggs not in shell/egg yolks boiled or cooked by steaming | 5% |
| GST on dried leguminous vegetables packed in a container having a registered trademark/brand name (skinned/split or not) | 5% |
| GST on vegetables such as ginger (excluding fresh ginger), turmeric (excluding fresh turmeric), thyme, curry leaves, bay leaves, etc. | 5% |
| GST on food such as meal/powder of dried leguminous vegetables | 5% |
| GST on fruits, vegetables, nuts, and edible plant parts preserved using sugar | 12% |
| GST on vegetables, fruits, nuts, and edible parts of the plant that are preserved/prepared using vinegar/acetic acid. | 12% |
| GST on food items prepared using flour, malt extract, etc. including cocoa less than 40% of total weight. | 18% |
| GST on chocolate and other cocoa products | 18% |
Note: The GST rates on food products given in the list are subject to periodic change
Understanding GST Rules for Restaurants
1. Standalone Restaurants
Standalone restaurants, which are not located within hotels and do not provide accommodation services, are generally subject to a 5% GST rate on their services. However, they do not have the option to claim Input Tax Credit (ITC) on the GST paid for their inputs.
This 5% GST rate applies to both food and beverages served by standalone restaurants.
2. Restaurants within Hotels
Restaurants that are part of hotels where the room tariff is Rs. 7,500 or more per day fall under a different GST category. These restaurants are subject to an 18% GST rate on their services, including food and beverages served. The key difference here is that they can claim Input Tax Credit (ITC) for the GST paid on their inputs, such as raw materials, services, and other supplies used in providing the restaurant services.
FAQs
Is GST applicable on takeaway and home delivery?
Yes, GST is applicable on takeaway and home delivery services provided by restaurants. The rate is 5% without input tax credit (ITC).
What is the GST rate on restaurants?
The GST rate on restaurants depends on the type of service:
| Type of Restaurant | GST Rate |
|---|---|
| Standalone restaurants (AC or Non-AC) | 5% (no ITC) |
| Restaurants inside hotels with room tariffs of ₹7,500 or less | 5% (no ITC) |
| Restaurants inside hotels with room tariffs above ₹7,500 | 18% (with ITC) |
| Outdoor catering (non-industrial) | 18% |
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