GST for Restaurants 2026 – Rates, Registration, ITC & Complete Compliance Guide
Complete GST guide for restaurants, cloud kitchens, QSRs, dhabas, and food service businesses in India. GST 2.0 rates on dine-in, takeaway, and delivery. Composition scheme, ITC rules, Zomato/Swiggy compliance, and registration thresholds.
Quick Summary – GST for Restaurants
- GST Rate on Restaurant Services (2026): 5% (without ITC) for standalone restaurants, QSRs, cloud kitchens, dhabas, and takeaway. 18% (with ITC) for restaurants inside hotels with room tariff above ₹7,500 per night.
- Composition Scheme: Available for restaurants with turnover up to ₹1.5 crore (not serving alcohol, no inter-state sales, no e-commerce). Pay 5% GST on turnover with no ITC.
- GST Registration Threshold: ₹20 lakh for restaurants in normal states (₹10 lakh in special category states). Mandatory if selling through Zomato or Swiggy, regardless of turnover.
- ITC: Not available for restaurants at 5% GST. Available only for restaurants at 18% GST (hotels with room tariff above ₹7,500).
- Zomato/Swiggy Compliance: The platform collects and pays GST on food orders under Section 9(5). The restaurant must still report these sales in GSTR-3B.
- Return Filing: GSTR-1 and GSTR-3B monthly for regular scheme; CMP-08 quarterly and GSTR-4 annually for composition scheme.
Takeaway: Most restaurants charge 5% GST without ITC. Only high-end hotel restaurants (room tariff above ₹7,500) charge 18% GST with ITC. Choose your scheme carefully based on turnover, alcohol service, and e-commerce usage.
1. Introduction – GST for Restaurants in India
The restaurant industry in India is one of the largest and fastest-growing sectors, spanning fine dining establishments, quick service restaurants (QSRs), cloud kitchens, dhabas, food courts, and standalone eateries. For restaurant owners and food service operators, Goods and Services Tax (GST) compliance is a critical business function that affects pricing, profitability, and customer experience.
Under the GST framework, restaurant services are classified under SAC Code 9963 (Food and Beverage Services). The rate structure for restaurants is unique – most standalone restaurants and QSRs charge 5% GST without Input Tax Credit (ITC), while restaurants inside hotels with room tariffs exceeding ₹7,500 per night charge 18% GST with ITC.
With the rollout of GST 2.0 effective 22 September 2025, the government introduced a uniform 5% GST for all standalone restaurants, whether air-conditioned or non-air-conditioned. This reform simplified the earlier multi-slab structure and brought significant relief to both restaurant owners and diners.
This comprehensive guide covers GST rates on restaurant services, registration thresholds, the composition scheme, Input Tax Credit rules, Zomato/Swiggy compliance, return filing, and common pitfalls for restaurant businesses.
Takeaway: Most restaurants charge 5% GST without ITC. Only high-end hotel restaurants charge 18% GST with ITC. Understanding the AC/non-AC and hotel/specified premises distinction is critical for compliance.
2. GST 2.0 Rates on Restaurant Services (2026)
Under GST 2.0, restaurant services have a two-tier rate structure based on the location and type of establishment. The table below summarises the applicable GST rates for various restaurant services.
| Restaurant Type | GST Rate | ITC Availability |
|---|---|---|
| Standalone Restaurant (AC or Non-AC) | 5% | ❌ No ITC |
| QSR / Fast Food / Takeaway | 5% | ❌ No ITC |
| Cloud Kitchen | 5% | ❌ No ITC |
| Food Delivery via Zomato / Swiggy | 5% (collected by platform) | ❌ No ITC |
| Restaurant in Hotel with Room Tariff ≤ ₹7,500 | 5% | ❌ No ITC |
| Restaurant in Hotel with Room Tariff > ₹7,500 (Specified Premises) | 18% | ✅ Yes |
| Outdoor Catering (Standalone) | 5% | ❌ No ITC |
| Catering at Specified Premises | 18% | ✅ Yes |
| Indian Railways / IRCTC Food Services | 5% | ❌ No ITC |
GST Rate for Alcohol
Alcoholic beverages for human consumption are outside the GST regime. They are taxed separately under State Excise / VAT. On a mixed bill, only the food portion is charged GST. Restaurant owners must maintain separate records for food and alcohol sales.
Key Changes Under GST 2.0 for Restaurants
Takeaway: Apply 5% GST on all standalone restaurant services (dine-in, takeaway, delivery). Apply 18% GST only for restaurants in specified hotel premises.
3. GST Registration for Restaurants – Eligibility & Threshold
Under Section 22 of the CGST Act, 2017, registration is mandatory for restaurant businesses if the aggregate turnover exceeds the prescribed limit.
| Business Type | Normal States | Special Category States |
|---|---|---|
| Restaurants & Food Service Businesses | ₹20 lakh | ₹10 lakh |
| Restaurants with Goods (Packaged Food) Sales | ₹40 lakh | ₹20 lakh |
| Restaurants Selling through Zomato / Swiggy | Mandatory regardless of turnover | Mandatory |
| Inter-State Restaurant Chains | Mandatory regardless of turnover | Mandatory |
Mandatory Registration Cases for Restaurants
Voluntary Registration: Even if turnover is below the threshold, voluntary registration may be beneficial for claiming ITC (only if charging 18% GST) or for building business credibility with corporate clients.
Takeaway: If your turnover exceeds ₹20 lakh, GST registration is mandatory. Registration is also mandatory if you sell through Zomato or Swiggy, regardless of turnover.
4. Composition Scheme for Restaurants – Eligibility & Conditions
The Composition Scheme is a simplified GST option for small restaurants. Under this scheme, eligible restaurants pay a flat 5% GST on turnover (2.5% CGST + 2.5% SGST) with no ITC benefits.
| Parameter | Details |
|---|---|
| Eligibility | Restaurants with turnover up to ₹1.5 crore (₹75 lakh in special category states) |
| GST Rate | 5% on turnover (2.5% CGST + 2.5% SGST) |
| ITC | ❌ Not available on any inputs, input services, or capital goods |
| Invoicing | Bill of Supply (cannot collect GST separately from customers) |
| Returns | CMP-08 (quarterly) + GSTR-4 (annual) |
| Board Display | Must display "Composition Taxable Person, Not Eligible to Collect Tax" |
Restrictions under Composition Scheme
- ❌ Cannot serve alcohol – Liquor is outside GST and not eligible for composition.
- ❌ Cannot make inter-state supplies – Services must be within the same state.
- ❌ Cannot sell through Zomato/Swiggy – E-commerce operators are liable under Section 9(5).
- ❌ Cannot deal in excluded goods – Ice cream, pan masala, tobacco, etc.
- ❌ Cannot claim ITC – All input GST becomes a permanent cost.
Takeaway: Composition scheme is ideal for small, intra-state restaurants that do not serve alcohol or use food delivery platforms. It offers lower compliance burden but no ITC benefits.
5. Input Tax Credit (ITC) for Restaurants – Rules & Restrictions
Input Tax Credit (ITC) is the mechanism that allows businesses to offset GST paid on purchases against GST collected on sales. For restaurants, ITC availability depends on the GST rate charged.
| Restaurant Type | GST Rate | ITC Availability |
|---|---|---|
| Standalone Restaurant / QSR / Cloud Kitchen | 5% | ❌ No ITC |
| Restaurant in Hotel (Room Tariff ≤ ₹7,500) | 5% | ❌ No ITC |
| Restaurant in Hotel (Room Tariff > ₹7,500) – Specified Premises | 18% | ✅ Yes |
| Composition Scheme Restaurant | 5% (on turnover) | ❌ No ITC |
Why ITC is Not Available at 5% GST
The 5% concessional GST rate for restaurants is designed as a simplified, low-rate structure. In exchange for the lower rate, the government has blocked ITC on all inputs and input services for restaurants at this rate. This means the GST paid on raw materials, packaging, rent, equipment, and professional services becomes a permanent cost for the restaurant.
Blocked Credits under Section 17(5)
| Particulars | 5% GST (No ITC) | 18% GST (With ITC) |
|---|---|---|
| Monthly Revenue | ₹10,00,000 | ₹10,00,000 |
| GST Collected | ₹50,000 | ₹1,80,000 |
| GST Paid on Inputs | ₹40,000 | ₹40,000 |
| ITC Claimed | ₹0 | ₹40,000 |
| Net GST Payable | ₹50,000 | ₹1,40,000 |
Although the 5% rate results in lower net GST payable, the restaurant absorbs ₹40,000 in input GST as a cost. The 18% rate allows ITC but results in higher net GST payable. The optimal choice depends on the restaurant's input cost structure.
Takeaway: Most restaurants at 5% GST cannot claim ITC. Only restaurants at 18% GST (specified premises) can claim ITC on eligible business inputs.
6. GST Compliance for Zomato, Swiggy & Food Delivery Platforms
Food delivery through aggregators like Zomato and Swiggy has become a significant revenue channel for restaurants. Under GST, these platforms have specific compliance responsibilities under Section 9(5) of the CGST Act.
How GST Works on Zomato / Swiggy Orders
- Platform Collects GST: The e-commerce operator (Zomato/Swiggy) collects and pays 5% GST on the food order on behalf of the restaurant.
- Restaurant Reporting: The restaurant must still report these platform sales in its GSTR-3B return.
- TCS: The platform collects 1% TCS on net supplies and deposits it with the government.
- Delivery Fee: The delivery fee charged by the platform attracts 18% GST.
- Restaurant's GST Liability: Since the platform pays GST under Section 9(5), the restaurant does not separately pay GST on platform orders.
Restaurant's Compliance Obligations
Takeaway: Platforms collect and pay GST on food orders under Section 9(5). Restaurants must still register and report platform sales. Composition scheme is not available if using platforms.
7. GST Returns Filing for Restaurants
Restaurants must file GST returns based on their chosen scheme – regular or composition.
| Return | Description | Due Date |
|---|---|---|
| GSTR-1 | Outward supplies (sales) – regular scheme | 11th of following month |
| GSTR-3B | Summary return with ITC and payment – regular scheme | 20th of following month |
| CMP-08 | Quarterly statement for composition scheme | 18th of month after quarter |
| GSTR-4 | Annual return for composition scheme | 30 June |
| GSTR-9 | Annual return – regular scheme | 31 December |
Key Reporting Requirements
Takeaway: File returns on time to avoid late fees of ₹50 per day and interest on unpaid tax. Report platform sales and alcohol sales correctly.
8. Common GST Mistakes by Restaurants & Solutions
✅ Solution: All standalone restaurants charge 5% GST. Apply the correct rate.
✅ Solution: ITC is not available at 5% GST. Do not claim ITC on inputs.
✅ Solution: Composition is not allowed if using e-commerce platforms. Switch to regular scheme.
✅ Solution: Report all platform sales separately in GSTR-1 and GSTR-3B.
✅ Solution: Alcohol is outside GST. Only food portion attracts GST.
✅ Solution: File GSTR-9 by 31 December and GSTR-4 by 30 June.
Takeaway: Correct rate application, proper reporting of platform sales, and timely filing are the keys to error-free compliance.
9. Penalties & Risks for Non‑Compliant Restaurants
Takeaway: Apply correct GST rates and report sales accurately to avoid penalties.
10. Industry‑Specific GST Insights for Restaurants
5% GST on food. Separate accounting for alcohol. ITC not available at 5% rate.
5% GST on all orders. No ITC. Register if turnover exceeds ₹20 lakh or if using delivery platforms.
5% GST on all orders. Mandatory GST registration if using Zomato/Swiggy. Cannot opt for composition scheme.
5% GST on food. No ITC. Report separately from room revenue if billed separately.
18% GST on food with ITC. Composite supply rules apply if food is bundled with room.
5% GST if registered. Composition scheme available for turnover up to ₹1.5 crore (no alcohol).
Takeaway: Tailor your GST compliance based on your restaurant type – standalone, cloud kitchen, hotel restaurant, or QSR.
11. Comparison: Regular vs Composition Scheme for Restaurants
| Parameter | Regular Scheme (5% GST) | Composition Scheme |
|---|---|---|
| Turnover Limit | No limit | Up to ₹1.5 crore |
| GST Rate | 5% on food | 5% on turnover |
| ITC Availability | ❌ No | ❌ No |
| Alcohol Sales | ✅ Allowed | ❌ Not allowed |
| Zomato/Swiggy Sales | ✅ Allowed | ❌ Not allowed |
| Inter-State Sales | ✅ Allowed | ❌ Not allowed |
| Returns | Monthly (GSTR-1, GSTR-3B) | Quarterly (CMP-08) + Annual (GSTR-4) |
| Invoice | Tax Invoice with 5% GST | Bill of Supply (no GST collected) |
Takeaway: Regular scheme offers flexibility for alcohol and platform sales; composition suits small, intra-state restaurants without alcohol or delivery apps.