If you run a restaurant, takeaway or cafe in India, one question comes up again and again at the billing counter: do I charge 5% or 18% GST on the food? And can I claim back the GST I pay on rent, equipment and raw materials?
The short answer is that almost every independent restaurant charges 5% GST with no input tax credit. But the rules around hotels, delivery apps and the composition scheme cause genuine confusion — and getting the input-credit part wrong is one of the fastest ways to land a GST notice. This guide explains exactly which rate applies to you, what changed when "GST 2.0" came in, and the thresholds that decide whether you register at all.
Key takeaways
- Standalone restaurants, including takeaway, charge 5% GST without input tax credit (ITC) (ClearTax, 2025).
- 18% applies only inside "specified premises" — a restaurant in a hotel where any room tariff is ₹7,500 or more — and there you can claim ITC (ClearTax, 2025).
- GST 2.0 (effective 22 September 2025) did not change the standalone restaurant rate. It stayed 5% no-ITC, which predates the reform (ClearTax, 2025).
- The delivery fee on Swiggy and Zomato now carries 18% GST from 22 September 2025, billed by the platform as the deemed supplier (Business Today, 2025).
- Claiming ITC while on the 5% rate is the classic trap — it gets reversed with interest, and enforcement is now data-driven, cross-matching your returns against aggregator and bank data (Patron Accounting, 2025).
- You must register once turnover crosses ₹20 lakh (₹10 lakh in special-category states) (ClearTax, 2025).
What is the 5% restaurant GST rate?
A standalone restaurant — meaning one that is not inside a hotel charging ₹7,500 or more a night — charges 5% GST on its food, with no input tax credit. This covers dine-in, takeaway and outdoor catering alike (ClearTax, 2025).
"No input tax credit" is the part owners most often miss. It means you collect 5% from the customer and pay it to the government, but you cannot offset the GST you paid on your own purchases — rent, gas, packaging, a new tandoor, the POS subscription — against it. That GST is simply a cost you absorb. It is the trade-off for the low headline rate.
The old distinction between air-conditioned and non-air-conditioned restaurants is gone. Both are now taxed identically at 5% without ITC, so whether your dining room has an AC unit makes no difference to the rate you charge (Razorpay, 2025).
On a ₹500 food bill, that 5% is ₹25 — split as ₹12.50 CGST and ₹12.50 SGST — so the customer pays ₹525. That single line on the bill is the whole rate, with nothing to claim back at your end.
When does an Indian restaurant charge 18% GST instead?
18% GST applies to restaurant food in one main situation: when the restaurant sits inside "specified premises" — a hotel where the value of any room is ₹7,500 or more per day. In that case the food is taxed at 18%, and the business can claim input tax credit (ClearTax, 2025).
This is where a stubborn myth needs killing: a standalone restaurant is not "18% with full ITC." You do not get to choose the 18% rate so you can start claiming credit. The 18%-with-ITC treatment is tied to the specified-premises hotel test, not to your preference. If your restaurant is a high-street establishment, a takeaway counter or a cloud kitchen, you are on 5% no-ITC, full stop (ClearTax, 2025).
So the rate is decided by where you operate, not by what you would like to claim:
- Standalone restaurant / takeaway / cafe → 5%, no ITC.
- Restaurant in a hotel with room tariff below ₹7,500 → 5%, no ITC.
- Restaurant in a hotel with any room tariff ₹7,500 or more → 18%, with ITC.
Did GST 2.0 change the restaurant rate?
No. The 56th GST Council's rate overhaul — widely called "GST 2.0" — took effect on 22 September 2025 and collapsed most goods and services into two main slabs of 5% and 18% (ClearTax, 2025). But the standalone restaurant rate of 5% without ITC was already in place before the reform, and it stayed exactly the same afterwards.
This matters because a lot of online content wrongly implies GST 2.0 "made restaurants 5%." It did not create or alter your rate. For most restaurant owners, the one practical change GST 2.0 brought was on the delivery side (covered next) — plus some lower rates on certain packaged food inputs you buy, which is welcome but does not change the 5% you charge on a plate of food.
If you also hold an FSSAI licence and manage labour compliance, treat GST the same way — as one of the three recurring statutory duties to keep clean. Our FSSAI licence checklist for Indian restaurants and the restaurant labour-law compliance checklist cover the other two.
Why is the delivery fee on Swiggy and Zomato now taxed at 18%?
From 22 September 2025, the delivery charge collected by aggregators such as Swiggy and Zomato attracts 18% GST, with the platform treated as the supplier of that delivery service under Section 9(5) (Business Today, 2025). Earlier, the delivery fee itself was effectively untaxed; now it adds to what the customer pays at checkout on the app (Angel One, 2025).
This is separate from the GST on your food. On orders placed through an aggregator, the platform has — since 1 January 2022 — been liable to pay the 5% GST on the restaurant's food supply under Section 9(5), as if it were the supplier (ClearTax, 2025). In plain terms: on a Swiggy or Zomato order, the platform handles the 5% on the food; on your dine-in, takeaway and direct orders, that 5% stays in your hands.
There is a margin point hiding here. Every order routed through an aggregator is an order where the platform — not you — controls the GST mechanics, the commission and now an 18%-taxed delivery fee on top. A direct ordering page or WhatsApp channel you own keeps those orders off the Section 9(5) aggregator path and out of the commission entirely; tools like DineHere build that page from a menu photo, but the principle holds whichever route you take. For the full commission maths, see how much Swiggy and Zomato really cost Indian restaurants.
Can I claim input tax credit on the 5% rate?
No — and this is the single most expensive misunderstanding in restaurant GST. A restaurant on the 5% rate cannot claim ITC on any input (ClearTax, 2025). If you claim it anyway, the credit gets reversed with interest, and a penalty can follow.
The risk has grown because enforcement is no longer manual. GST authorities now run data-driven checks that compare your reported sales against your e-invoice data, the TCS data filed by Swiggy and Zomato, and your bank transactions — so a mismatch between what you declared and what the aggregators reported on your behalf can surface an ITC claim you should never have made (Patron Accounting, 2025).
The practical rule is simple: if you are on 5%, treat the GST on your purchases as a cost, not a credit. The only restaurants that legitimately claim ITC are those in specified-premises hotels charging the 18% rate.
Do I need to register for GST?
You must register for GST once your aggregate turnover crosses ₹20 lakh in a financial year — or ₹10 lakh if you operate in a special-category state (ClearTax, 2025).
Two cautions. First, the higher ₹40 lakh threshold you may have read about applies to suppliers of goods, not services — restaurant service falls under the ₹20 lakh limit. Second, "aggregate turnover" means your total across all outlets under the same PAN, not per branch. Many growing owners cross the line sooner than they expect once a second location opens.
What is the GST composition scheme for restaurants?
The composition scheme is a simplified option for smaller restaurants. You pay 5% GST (2.5% CGST + 2.5% SGST) on turnover, available up to an aggregate turnover of ₹1.5 crore — or ₹75 lakh in the North-Eastern states and Himachal Pradesh. You file a quarterly statement instead of monthly returns, but you cannot claim ITC and cannot make inter-state supplies (ClearTax, 2025).
There is one trap that catches delivery-led restaurants. A composition-scheme business cannot supply through an e-commerce operator that collects TCS under Section 52 — which is exactly what Swiggy and Zomato do. So if you are on composition and list on the apps, you breach the scheme's conditions and risk being thrown out of it (ClearTax, 2025). For a restaurant that lives on aggregator orders, regular registration usually fits better than composition.
Do I need e-invoicing?
E-invoicing becomes mandatory once your aggregate annual turnover exceeds ₹5 crore in any financial year since 2017-18, calculated at the PAN level (CA Delhi India, 2025). Most independent single-site restaurants sit below this and are not required to generate e-invoices, but multi-outlet operators should check their combined turnover, because the threshold is tested across the whole PAN, not per restaurant.
Frequently asked questions
Is restaurant food 5% or 18% GST in India?
Standalone restaurants charge 5% GST with no input tax credit. 18% applies only to restaurants inside "specified premises" — hotels with a room tariff of ₹7,500 or more — where ITC can be claimed (ClearTax, 2025).
Can a standalone restaurant claim input tax credit?
No. At the 5% rate, ITC on inputs cannot be claimed; the GST you pay on rent, supplies and equipment is a cost you absorb (ClearTax, 2025).
Is GST on takeaway food the same as dine-in?
Yes. For a standalone restaurant, takeaway is taxed at the same 5% no-ITC rate as dine-in (ClearTax, 2025).
Did GST 2.0 change my restaurant rate?
No. GST 2.0, effective 22 September 2025, restructured slabs to mainly 5% and 18%, but the standalone restaurant rate of 5% without ITC predates it and was unchanged (ClearTax, 2025).
Why is there 18% GST on my Swiggy or Zomato delivery fee?
From 22 September 2025 the delivery charge collected by aggregators attracts 18% GST, with the platform treated as the supplier of the delivery service (Business Today, 2025).
Who pays the GST on Swiggy and Zomato food orders?
Since 1 January 2022, the aggregator is liable to pay the 5% GST on the restaurant's food supplied through the platform under Section 9(5) (ClearTax, 2025).
What is the GST registration threshold for a restaurant?
₹20 lakh aggregate turnover in normal states, ₹10 lakh in special-category states. The ₹40 lakh limit is for goods suppliers, not restaurant services (ClearTax, 2025).
What is the composition scheme rate for restaurants?
5% (2.5% CGST + 2.5% SGST), available up to ₹1.5 crore turnover (₹75 lakh in the North-Eastern states and Himachal Pradesh), with no ITC and no inter-state supply (ClearTax, 2025).
Can a composition-scheme restaurant sell on Swiggy or Zomato?
No. Composition restaurants cannot supply through e-commerce operators that collect TCS under Section 52, which disqualifies listing on Swiggy and Zomato (ClearTax, 2025).
When does e-invoicing become mandatory for a restaurant?
Once aggregate annual turnover crosses ₹5 crore in any financial year since 2017-18, tested at the PAN level (CA Delhi India, 2025).
GST rules and notifications change, and your exact position depends on your turnover, location and how you take orders. Treat this as a plain-English starting point and confirm the specifics for your business with a qualified chartered accountant before you file.
