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Restaurant bill › GST on restaurants
GST on restaurant bills: which rate applies?
Most restaurants charge 5% GST. A few charge 18%. The difference depends on where the restaurant is, not on the food.
The two rates
| Where the restaurant is | GST | Input tax credit |
|---|---|---|
| Standalone restaurants, cafés, dhabas, food courts, and restaurants in hotels that are not "specified premises" | 5% (2.5% CGST + 2.5% SGST) | Not allowed |
| Restaurants in "specified premises" | 18% (9% + 9%) | Allowed |
Specified premises, from 1 April 2025: a hotel or other accommodation that supplied any room at more than ₹7,500 a day in the previous financial year, or that has declared itself as specified premises. The 5% rate on restaurant service without input tax credit has applied since 15 November 2017.
"No input tax credit" means the restaurant cannot set off the GST it paid on its purchases (ingredients, rent, equipment) against the 5% it collects. Keep purchase bills anyway: your accountant needs them for the books.
Takeaway and home delivery
The same restaurant rate applies to takeaway and to delivery by your own staff. Choose Takeaway or Delivery as the order type; the bill and the rate stay the same.
Orders through food delivery apps
For restaurant service supplied through an e-commerce operator (the big food delivery apps), the operator collects and pays the GST on those orders under section 9(5) of the CGST Act, from 1 January 2022. The restaurant does not charge GST again on those orders; it shows them in its return as supplies through an e-commerce operator. Bill those orders as the app requires, and use this maker for your own dine-in, takeaway and direct delivery.
Composition
A small restaurant may choose composition: it pays GST as a percentage of its turnover (5% for restaurant service) from its own pocket and may not show or collect GST on its bills. Choose "Composition" in the settings: the bill becomes a bill of supply with the required words. The turnover limit and conditions are on the GST portal; check with your accountant before you opt in.
Prices with GST or plus GST?
Menus usually show prices before tax and add GST on the bill. If your menu prices already include GST, tick "Menu prices include GST": the bill then shows the same total the guest saw on the menu and works the tax out from it.