GST for Restaurants and Food Businesses in India
GST rate on standalone restaurants
Standalone restaurants, whether air-conditioned or non-AC, are taxed at a concessional 5% GST rate without the ability to claim Input Tax Credit on inputs. This flat rate applies to both dine-in and takeaway food sold by an independent restaurant not attached to a hotel with high-value rooms.
Restaurants inside hotels
The rate changes for restaurants operating within a hotel: if the hotel's room tariff exceeds a specified threshold (₹7,500 per night), the in-house restaurant is taxed at the standard 18% GST rate, and in this case Input Tax Credit becomes available on related inputs. Hotels below that room-tariff threshold keep their attached restaurants at the 5% rate, mirroring standalone restaurant treatment.
Food delivery and cloud kitchens
Food delivered through aggregator platforms (Swiggy, Zomato) is generally taxed at 5% at the restaurant level, with the platform itself responsible for specific compliance obligations depending on the arrangement, including e-commerce operator obligations under Section 9(5) in certain categories. Cloud kitchens and delivery-only restaurants follow the same 5% standalone-restaurant rate as a physical dine-in outlet.
GST on packaged and branded food items
Restaurants that also retail packaged food items — bottled beverages, branded snacks, takeaway packaged goods — must apply the specific GST rate for that product category rather than the blanket restaurant rate, since packaged goods sales are treated as a sale of goods, not a restaurant service. Check exact rates with the HSN/SAC Finder.
Registration threshold for food businesses
Restaurants and food businesses must register for GST once turnover crosses ₹20 lakh (services threshold applies to restaurant services) or ₹40 lakh if primarily treated as a goods business, whichever classification applies. Many small eateries also consider the Composition Scheme, which lets restaurants (without alcohol service) pay a flat 5% on turnover with simplified quarterly filing, though ITC is unavailable there too.
Quick reference
| Type | GST Rate | ITC |
|---|---|---|
| Standalone restaurant (AC/non-AC) | 5% | No |
| Restaurant in hotel (tariff ≤ ₹7,500) | 5% | No |
| Restaurant in hotel (tariff > ₹7,500) | 18% | Yes |
| Packaged/branded food retail | Product-specific | Case-by-case |