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.
For example, if you’re at a restaurant that serves both food and alcohol, you’ll pay GST on the food and non-alcoholic drinks, while VAT will be applied to the alcoholic beverages. For everyday food purchases, the GST rates range from 0% to 18%, depending on what you’re buying.
Table of Contents
Restaurant Bills Before GST Implementation
Before the implementation of GST, restaurant bills included multiple components:
- 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?
Restaurants fell under three different GST rate slabs, when the GST was first launched in July 2017.
- GST Rate on restaurants without air conditioning was subject to an 12% GST.
- GST Rate on restaurants with air conditioning or a liquor license was subject to an 18% GST.
- GST Rate on restaurants within five-star hotels was subject to a 28% GST.
At that time, all Indian restaurants in India could take advantage of the input tax credit. It is applicable when you paid GST while buying supplies for your restaurant, you could subtract that amount from your tax bill.
Related Read: GST Rate on Air Conditioners (AC): Find Latest GST Rate & HSN Code
GST on Restaurant Food & Services, Beverage Services, and Accommodation
Under GST, Restaurants fall under the 5% GST rate, with no option to claim input tax credit (ITC) or the 18% GST rate, with ITC claims.
GST rate is decided depending on the location of the restaurant. For example, a higher GST rate would be applicable for restaurants located within hotels where the room tariff exceeds a specific amount.
The GST rate on restaurant food services is determined based on the type of establishment and other factors.
Type of Service |
GST Rate |
| GST on standalone restaurants, including takeaway (Non-AC) | 5% with No Input Tax Credit |
| GST on standalone restaurants, including takeaway (AC) | 5% with No Input Tax Credit |
| GST on restaurants within hotels (room tariff < Rs. 7500) | 5% with No Input Tax Credit |
| GST on restaurants within hotels (room tariff ≥ Rs. 7500) | 18% with Input Tax Credit |
| GST on outdoor catering services | 18% with Input Tax Credit |
| GST on Quick Service Restaurants (QSR) | 5% with No Input Tax Credit |
| Meals/food services provided by Indian Railways/IRCTC or their licensees both in trains or at platforms. | 5% with No Input Tax Credit |
| 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 Input Tax Credit |
| Food services provided on a premise arranged for organizing function along with renting of such premises | 18% |
| Other Accommodation, food, and beverage services | 18% |
GST on Food Items
Food Items |
GST Rate |
| GST on fresh, chilled, frozen vegetables | Nil |
| GST on dried vegetables that are packaged and labelled | 5% |
| GST on dried leguminous vegetables other than pre-packaged and labelled | Nil |
| GST on dried leguminous vegetables that are pre-packaged and labelled | 5% |
| GST on fresh/dried coconuts, grapes, apples, bananas, and pears, among others | Nil |
| GST on fruits like citrus fruits, grapes, pear, apples, bananas, papaya, melons, pears, mangoes, and berries, among others | Nil |
| GST on vegetables, fruits, nuts, and edible plant parts that are preserved using sugar | 12% |
| GST on fruits, nuts, and edible plant parts that are preserved and/or prepared using vinegar and/or acetic acid. | 12% |
| GST on rye other than pre-packaged and labelled | Nil |
| GST on rye, pre-packaged and labelled | 5% |
| GST on pasteurized milk (excluding UHT milk) fresh milk, and milk and cream (not concentrated nor contains added sugar or sweeteners) | Nil |
| GST on milk and cream that is concentrated or contains added sugar or sweeteners | 5% |
| GST on curd, buttermilk, and lassi, other than pre-packaged and pre-labelled | Nil |
| GST on curd, buttermilk, and lassi that is pre-packaged and pre-labelled | 5% |
| GST on yoghurt and cream, whether containing sugar/flavouring or not | 5% |
| GST on fresh or chilled meat and fish | Nil |
| GST on meat that is packaged and labelled | 5% |
| GST on pre-packaged and labelled cereal flours other than of wheat or meslin, rye, etc. | 5% |
| GST on chocolate and food preparations containing cocoa | 18% |
| GST on birds’ eggs in shells | Nil |
| GST on birds’ eggs which are not in a shell | 5% |
| GST on rice other than pre-packaged and labelled | Nil |
| GST on rice, pre-packaged and labelled | 5% |
| GST on wheat or meslin (i.e. maize flour) other than pre-packaged or labelled | Nil |
| GST on pre-packaged and labelled wheat or meslin | 5% |
Related Read: GST HSN Code List
Understanding GST Rules for Restaurants
Restaurants in India fall under two broad categories for GST purposes:
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.
Note: GST rates are subject to periodic changes.
Food Bill Pre and Post GST Era with Example
In the below example, the total amount payable to the tax authorities under the current regime sums up to Rs.950. However, under GST, net outflow from the pocket will be Rs.250, thanks to the reduced rates.
Particulars |
Billing under VAT regime |
Billing under GST regime |
| Total Bill | 5000 | 5000 |
| Output Tax | ||
| VAT @14.5% | 725 | |
| Service tax@6% | 300 | |
| GST @5% | 250 | |
| Total output tax liability | 1025 | 250 |
| Input credit | ||
| VAT ITC (no ITC on ST) | 75 | |
| GST ITC | – | |
| Final Output tax liability | ||
| VAT | 650 | |
| Service Tax | 300 | |
| GST | 250 |
Impact of GST on Food Items and Restaurants
The Goods and Services Tax (GST) has significantly impacted the Indian restaurant industry and the taxation of food items.
1. Decrease in Effective Tax
Before GST, customers had to deal with various taxes like VAT and Service Tax. With GST, these taxes were combined into a single rate, which led to a slight decrease in the overall cost of dining out. However, this reduction wasn’t very significant, and the service charge at restaurants stayed the same.
2. Input Tax Credit on Food and Restaurant Services
For restaurant owners, GST was expected to improve their cash flow by allowing them to get back the Input tax credit they paid on things like raw materials and rent. Initially, they couldn’t claim ITC. Although there have been changes since then, restaurants that charge 5% GST on their food services still can’t get these tax credits, unlike those charging 18% GST.
3. Exemption for Fresh and Frozen Food
As for food items, most fresh and frozen products, like vegetables and meat, are not taxed under GST. Only packaged foods with brand names are taxed. Currently, no food items are taxed more than 18%, and none fall into the highest tax bracket of 28%. So, there haven’t been any major price changes for food items due to GST..
4. Tax Slabs for Food Items
Food items and food services are categorized under various GST tax slabs, primarily 5% and 12%. This ensures that essential food items are not subjected to high taxation, with a maximum GST rate of 18% applicable to food services provided by restaurants.
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Frequently Asked Questions
1. How Much GST Tax on Food in Restaurant?
GST Rate on restaurants without AC is charged at a GST of 12%. GST Rate on restaurants with AC or liquor licenses is charged at an 18% GST, while GST Rate on restaurants within five-star hotels is charged at a 28% GST.
2. What is the rate of GST applicable on chocolate and cocoa products?
Chocolates and cocoa products have a GST rate of 18%.
3. Is there GST on takeaway food?
Yes, takeaway food does have GST. The GST rate on takeaway food can be either 5% or 18%, depending on where the restaurant is located.
4. What are the GST Rates on Catering Services?
GST rates on outdoor catering services is 18% (with ITC).
5. Is there a different GST rate for air-conditioned and non-air-conditioned restaurants?
No, there is no difference in GST rates for air-conditioned and non-air-conditioned restaurants under the current GST structure. Both are generally taxed at 5%.
6. Is GST applicable to packaged and processed food items?
Yes, GST on food items is applicable to packaged and processed food items, with rates generally ranging from 5% to 18%, depending on the type of product.
7. What is the GST rate on food served in trains?
The GST rate on food served in trains is 5%, irrespective of whether the food is cooked on board or supplied from outside.
8. What is the highest GST rate applicable on food items?
The highest rate of GST applicable in the food segment is 28%, which is applicable to certain goods such as caffeinated and carbonated beverages.
9. Are there any food items exempt from GST?
Yes, most fresh and frozen foods like vegetables, fresh fruits, meat, fish, etc. are exempt from GST.
10. Can restaurants claim input tax credit (ITC) on GST paid?
Restaurants can claim ITC if they charge 18% GST, but not if they charge 5% GST.
11. Is GST mandatory for customers to pay on food?
Yes, GST is generally applicable to food items and restaurant services in India.
While some fresh and unprocessed food items are exempt, most packaged food products and restaurant meals are subject to GST. The specific GST rate depends on factors like the type of food, restaurant location, and whether the food is served for consumption or sold as a packaged product.
