GST on food looks simple until you get a notice. Most restaurants charge one rate on everything, but the right rate depends on where you operate, how you are registered and how the order reached you. This guide explains the common cases in plain language. Rules change, so confirm your own treatment with your CA.
The usual case: 5% without input tax credit
Most standalone restaurants, cafés, sweet shops and fast-food outlets charge 5% GST on restaurant service, split as 2.5% CGST and 2.5% SGST. The trade-off is that they cannot claim input tax credit on their purchases. This applies whether the customer eats in, takes away or the restaurant delivers the food itself.
Restaurants in higher-tariff hotels: 18% with input tax credit
Restaurant service inside hotel premises where room tariffs cross the threshold set by the GST rules (currently linked to ₹7,500 per room per day) is taxed at 18% with input tax credit allowed. If your restaurant is inside a hotel, check how the premises are classified before you set your rate.
Composition restaurants cannot charge GST on the bill
A restaurant registered under the composition scheme pays tax on its turnover at a fixed rate, but it cannot collect GST from customers or show tax on the bill. It issues a bill of supply, not a tax invoice. Printing "GST 5%" on a composition restaurant's bill is a common and avoidable mistake.
Swiggy and Zomato orders
For food ordered through e-commerce operators such as Swiggy and Zomato, the platform collects and pays the 5% GST on restaurant service, not the restaurant. Do not charge GST again on those orders. Record them separately so your sales and GST returns reconcile with the platform's statements.
Service charge
Consumer-protection guidelines say service charge cannot be added to the bill automatically or by default. If a customer agrees to pay it, it becomes part of the value of the service and GST applies to it as well.
What a restaurant tax invoice should show
- Restaurant name, address and GSTIN.
- A unique, sequential invoice number for the financial year, and the date.
- Each item, its quantity and value.
- The taxable value, the GST rate and the CGST and SGST amounts.
- The total payable, and the payment mode is helpful for reconciliation.
Mistakes that cause trouble later
- Charging 18% on a standalone restaurant bill, or 5% while also claiming input tax credit.
- Showing GST on a composition restaurant's bill.
- Charging GST again on food-app orders that the platform already taxed.
- Gaps or repeats in invoice numbers after a software change or a reinstall.
- Different rates on similar menu items because each was entered by hand.
Let the software carry the rules
The safest setup is to decide your rate with your CA once, set it on each menu category, and let the billing software apply it to every item and every bill. ByteCraft POS Restaurant does this, prints the tax breakup on each bill and keeps invoice numbers sequential, so filing time is a check rather than a rebuild.