Home > GST > Help Center > GST on Restaurants Last Updated: Feb 08th 2025
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
- Impact of GST while ordering through Swiggy, Zomato etc.
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 |
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
55th GST Council meeting proposed for the omission of definition of declared tariff and amend the definition of specified premises. W.e.f 01st April 2025, the GST rate on restaurant services in hotels will be dependent on the value of supply of units of accommodation in the preceding financial year. Currently it depends on the value of supply of units of accommodation in the current financial year
Example: River Bay hotel sells a hotel room on 31st January 2025@ Rs 8500. In this case, the hotel is required to pay GST @ 18% on its entire sale from 01st April 2024 to 31st March 2025. There is no possibility that the hotel will know that it is going to sell its room for 8500 at the start of the year. In this case, the hotel needs to pay the balance 13% (18%-5%) out of its pocket which is a loss to the hotel.
Hence this has been amended to avoid that loss to industry. W.e.f 01st April 2025, the hotel will pay GST @ 18% / 5% depending on previous financial year accommodation rate.
Note: Also the hotels with restaurant services can opt to pay GST @ 18% with ITC by giving a declaration at the start of the financial year.
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 (From 01st July 2017 to 30th Sep 2019) | GST Rate (From 01st Oct 2019 to 17th July 2022) | GST Rate w.e.f 18th July 2022 |
|---|---|---|---|---|
| 1 | Rs 1 to Rs 1000 per day | 0% | 0% | 12% |
| 2 | Rs 1001 to Rs 2500 per day | 12% | 12% | 12% |
| 3 | Rs 2501 to Rs 7500 | 18% | 12% | 12% |
| 4 | Above Rs 7500 | 18% | 18% | 18% |
4. Impact of GST while ordering through Swiggy, Zomato etc
Swiggy and Zomato are among the most prominent food delivery platforms in use today. The consumer is obligated to pay GST at a rate of 5% on the cost of the food when ordering through food aggregators such as Swiggy and Zomato, and at a rate of 18% on the platform charges.
Additionally, food aggregators (Swiggy, Zomato) are mandated to collect 5% GST and remit it to the government as of January 1, 2022. This was implemented to eliminate the practice of tax evasion by restaurants. In the past, restaurants were accountable for paying the GST that was collected. In accordance with this provision, clients are not required to pay any additional GST.