Restaurants in India charge 5% GST without input tax credit in almost all cases, dine-in, takeaway and delivery alike, split 2.5% CGST + 2.5% SGST within a state. The 18% rate (with input credit) applies only to restaurants in "specified premises": hotels where any room exceeded ₹7,500/night in the previous financial year. Alcohol sits outside GST under state VAT.
This guide is general information current to mid-2026, written to be reviewed with a chartered accountant, it is not tax advice for your specific facts. GST rates, thresholds and rules change through Council decisions; your CA and the CBIC notifications are the authority.
When is restaurant GST 5%, and when is it 18%?
| Situation | Rate | Input tax credit? |
|---|---|---|
| Standalone restaurant, dine-in, takeaway, delivery | 5% | No |
| Restaurant inside a hotel, all rooms ≤ ₹7,500/night (prior FY) | 5% | No |
| Restaurant inside "specified premises" (any room above ₹7,500/night, prior FY) | 18% | Yes |
| Outdoor catering (standalone) | 5% | No |
| Alcohol served anywhere | Outside GST | State VAT applies |
The logic to remember: 5% is a concessional rate that trades away input credit. You charge less tax but absorb the GST you pay on rent, equipment and supplies. Hotel restaurants at 18% recover those credits, at premium price points, that trade can favour 18%. Standalone restaurants get no choice: 5%, no ITC.
Compute any bill's split:
Most restaurants charge 5% GST without input tax credit. 18% (with ITC) applies to restaurants in 'specified premises', hotels where any room exceeded ₹7,500/night in the prior year. Alcohol is outside GST (state VAT applies). This is general information, not tax advice, confirm your slab with your CA. CountStand's billing engine applies the right split automatically and files GSTR-1 in one click.
What changed with Zomato and Swiggy orders?
Since January 2022, food-delivery platforms are the ones who collect and remit the 5% GST on restaurant services ordered through them (Section 9(5), the "e-commerce operator" mechanism). Practically: for aggregator orders, the platform pays the GST to the government; you still report those supplies correctly in your returns (they flow differently in GSTR-1, not as your taxed outward supplies), and your reconciliation must tie platform statements to your books. Direct orders, your counter, your WhatsApp/QR storefront, remain yours to tax and remit as usual. Double-counting aggregator GST, in either direction, is among the most common notices small restaurants receive; this is precisely the reconciliation a competent billing system should automate.
What about the composition scheme?
Restaurants (not serving alcohol) with turnover up to ₹1.5 crore can opt for the composition scheme: pay 5% of turnover, file quarterly, dramatically less paperwork. The trade-offs are real, though: no input credit, no inter-state supply, you cannot collect tax from customers (it comes out of your price), composition dealers can't supply through e-commerce operators in the standard way, and "composition taxable person" must appear on your signage and bills. For a small cash-and-counter operation it can be genuinely simpler; the moment aggregators or growth enter the plan, regular registration usually wins. Model both with your CA before opting.
Which returns does a restaurant actually file?
The regular-registration rhythm:
- GSTR-1, outward supplies (your sales), monthly; or quarterly under the QRMP scheme if turnover permits.
- GSTR-3B, the summary return where tax is actually paid, monthly (with QRMP: quarterly filing, monthly payment).
- GSTR-9, the annual return, above the notified turnover threshold.
Where restaurants bleed hours is GSTR-1 preparation: every invoice of the month, sequenced, classified, reconciled with aggregator statements. If invoice numbering broke during a POS outage or a manual-bill afternoon, month-end becomes archaeology. This is an engineering problem wearing a compliance costume, which is why CountStand's billing keeps sequence through offline periods, computes tax in integer paise (bills and returns never disagree by that maddening ₹1), and produces the GSTR-1-ready export in one click.
Does e-invoicing apply to restaurants?
E-invoicing (IRN generation on the government portal) applies above a notified aggregate-turnover threshold, ₹5 crore as of its last step-down, and the trajectory has been downward for years. Most single-outlet restaurants remain below it; growing chains cross it sooner than they expect, and B2B invoices (corporate catering, banquet billing) are where it bites first. Two practical notes: aggregate turnover counts PAN-wide across outlets, not per location; and retrofitting e-invoicing onto a billing system that never planned for it is painful, CountStand keeps IRN-ready fields on every invoice so the switch is configuration, not migration. Confirm the current threshold with your CA.
Charging 18% "to be safe" (you're overcharging customers); claiming ITC on the 5% slab (not allowed, expect a notice); broken invoice sequences from outages and bill books; treating aggregator-collected GST as your own liability or ignoring it entirely; and missing that delivery charges you levy directly are taxable at your rate. Every one of these is preventable by system design rather than memory.
The one-screen summary
Standalone restaurant → 5%, no ITC, CGST/SGST split on every bill. Hotel restaurant → check the ₹7,500 room-tariff test for 18% + ITC. Aggregator orders → platform remits, you reconcile. Under ₹1.5 crore and simple → composition is worth a CA conversation. Bills → sequential, split shown, GSTIN displayed. Returns → GSTR-1 + 3B on rhythm, reconciled to the paise. Or: run billing software where all of this is the default behaviour, and spend month-end running the restaurant instead. The GST calculator and bill-format generator are free either way.
Is GST on restaurant food 5% or 18%?
5% without input credit for nearly all restaurants, dine-in, takeaway and delivery. 18% with ITC applies only inside "specified premises": hotels where any room went above ₹7,500/night in the previous financial year. Alcohol is outside GST and carries state VAT.
Can restaurants claim input tax credit?
Not on the 5% concessional rate, ITC is expressly barred there. Restaurants correctly billing 18% (specified-premises) can claim ITC on inputs. Claiming ITC while charging 5% is a classic notice-generator.
Who pays GST on Zomato and Swiggy orders?
Since January 2022 the platform collects and remits the 5% GST on restaurant services ordered through it. The restaurant still reports these supplies appropriately and must reconcile platform statements against its books, the error zone is double-counting in either direction.
What is the composition scheme for restaurants?
An option for non-alcohol restaurants up to ₹1.5 crore turnover: 5% of turnover, quarterly compliance, minimal paperwork, but no ITC, no tax collection from customers, no inter-state supply, and constraints with e-commerce platforms. Simpler for small counter operations; usually outgrown quickly.
Do restaurants need e-invoicing?
Only above the notified aggregate-turnover threshold (₹5 crore at its last step-down; confirm current). Turnover counts PAN-wide across outlets. Systems with IRN-ready invoice structures make crossing the threshold a setting, not a re-platform.