Home > GST > Help Center > GST on Restaurants Last Updated: Dec 11th 2023
GST on Restaurants, Hotels, and Food
The Goods and Services Tax (GST) is a secondary tax that went into effect on July 1, 2017. Hotel, restaurant, and food business owners all have to pay GST. GST has taken the place of older tax systems like VAT (which was a tax on food) and Service Tax (which was a tax on services). GST will be added to the price of goods and services.
This document covers
- Threshold of Registration for Restaurants or Hotels
- Rate of GST on Restaurant Services
- Rate of GST for Hotel Services
1. Threshold of Registration for Restaurants or Hotels
- Regular GST: Every Person carrying on the business of hotel or Restaurant or food business shall be required to register under GST if their annual turnover exceeds certain threshold of Rs 20 lakhs/40 lakhs.
Refer GST Registration Thresholds, Exceptions, Examples for state wise GST registration threshold limits.
- Composition GST: The persons carrying on hotel or restaurant or food business can also register under composition scheme if the turnover is less than 1.5 crores.
Refer @ What are the differences between Composition & Regular GST Schemes?
2. Rate of GST on Restaurant Services
Restaurant services or Food services are of different types. The rate of GST is different for each kind of business setting.
| S.No | Particulars | Rate of GST | Applicability of ITC |
|---|---|---|---|
| 1 | Standalone Restaurants including Takeaway (AC/ Non- AC) | 5% | ITC Cannot be claimed by the business |
| 2 | Food or catering services provided by Indian Railways/IRCTC | 5% | ITC Cannot be claimed by the business |
| 3 | Outdoor Catering Services or Food Supply Services | 5% | ITC Cannot be claimed by the business |
| 4 | Food services provided by a restaurant within the hotel (Room Tariff is Less than or equal to 7500) | 5% | ITC Cannot be claimed by the business |
| 5 | Outdoor Catering within the hotels ((Room Tariff is Less than or equal to 7500) | 5% | ITC Cannot be claimed by the business |
| 6 | Food services provided by a restaurant within the hotel (Room Tariff is more than 7500) | 18% | ITC can be claimed by the business |
| 7 | Outdoor Catering within the hotels (Room Tariff is more than 7500) | 18% | ITC can be claimed by the business |
| 8 | Restaurants serving Alcohol (AC or Non AC) | 18% | ITC can be claimed by the business |
Note: Above rates are applicable if the business is registered under Regular Scheme. If the business registered as composition taxpayer, they are required to pay GST @ 5% without any ITC
3. Rate of GST for Hotel Services
GST is also levied on Hotel Services. The rate of GST in hotel services depends on the value of supply i.e., tariff.
| S.No | Room Rent | GST Rate |
|---|---|---|
| 1 | Rs 1 to Rs 1000 per day | 12% |
| 2 | Rs 1001 to Rs 7500 per day | 12% |
| 3 | More than Rs 7501 per day | 18% |