Restaurant GST in India

Restaurant service at a standalone restaurant generally attracts 5% GST without input tax credit. Since 1 November 2026, credit is allowed on one purchase, restaurant service bought from another restaurant outside specified premises. Restaurant service at a hotel’s specified premises attracts 18% with input tax credit, subject to the applicable conditions. Confirm your outlet’s treatment with your accountant before setting the bill rate.

This guide covers the basic restaurant-service rate and an intra-state bill under regular GST registration. It does not decide whether your business must register or whether it qualifies for composition. Give your accountant the registration details and a description of what you sell before using the examples.

The premises affect the rate

The 5% rate applies to restaurant service outside specified premises. A standalone restaurant cannot choose 18%. Only a person supplying or about to supply hotel accommodation can declare a premises as specified.

If any room was supplied at a value above ₹7,500 per day in one financial year, the premises is specified automatically for the next financial year. The test is the value of the supply. A published room tariff does not decide it. Otherwise, a registered hotel supplier can opt in with a declaration filed between 1 January and 31 March before the financial year starts. A person applying for registration can declare within 15 days of the application acknowledgement. For a restaurant inside a hotel, ask the accountant to confirm whether the location is specified premises for the relevant financial year.

Keep that confirmation with the outlet’s tax records. If the restaurant moves or its operating arrangement changes, send the new details to the accountant before copying the old setup.

CGST and SGST share the bill

For the intra-state example here, a total rate of 5% is split into 2.5% CGST and 2.5% SGST. At a total rate of 18%, the split is 9% CGST and 9% SGST. Both components are calculated on the same taxable value. In a union territory without its own legislature, UTGST takes the place of SGST.

In this example, a restaurant-service bill has a taxable value of ₹600 and the applicable rate is 5%. CGST is ₹15 and SGST is ₹15. Total GST is ₹30, making the bill total ₹630. These bill amounts are illustrative.

If the menu amount already includes GST, do not add the tax again. Ask the accountant to check a sample receipt against the menu’s stated tax treatment. Have staff explain the printed taxable value and tax lines using that approved example, rather than doing a different calculation at each table.

Purchase tax needs separate attention

At the 5% rate you generally cannot offset GST on your purchases against output tax. Since 1 November 2026 the one exception is GST on restaurant service bought from another restaurant outside specified premises. Ask your accountant whether any of your purchases qualify.

Send unusual sales to the accountant for classification instead of assuming every item sold at the counter has the same treatment. Record what was sold and how it was supplied. This guide does not classify retail goods, alcohol, catering contracts or sales through an ordering platform.

Review a bill before service

Check the restaurant details and tax split on a sample receipt before staff use a new setup. Keep a copy of the accountant’s instructions and record when the setup changed. When totals look wrong, preserve the original receipt and explain the difference rather than quietly replacing the evidence.

Maharaj reports include a tax summary and GSTR CSV files for your accountant. Maharaj prepares files; it does not file returns or provide e-invoicing. Keep the sales records and purchase invoices together for review before filing.