GST on Restaurants and Foods in 2026: Check Rates and Rules

Goods and Services Tax (GST) on restaurants in India is a crucial aspect of the country's taxation system, aimed at streamlining and simplifying the tax structure for food and beverage services. Implemented on 1st July 2017, GST replaced multiple indirect taxes such as VAT, service tax, and central excise duty, creating a unified tax regime. Restaurants fall under different GST slabs depending on their services and turnover. Learn more about the LUT full form in GST to understand its application in various scenarios.

Restaurants are categorised based on whether they are air-conditioned, serve alcohol, or are part of a larger hotel establishment. The GST rates for restaurants are designed to create a balanced approach, ensuring that the tax burden is manageable for both businesses and consumers. The introduction of GST has also aimed to bring about transparency and accountability in the food service industry.

The GST Council periodically reviews the rates and rules, ensuring they remain relevant to market conditions and economic needs. Restaurants have to comply with these rules and file regular GST returns, which helps in maintaining a streamlined taxation process.

GST rates for restaurant services

Most food items fall under the 5% GST slab. Basic essentials such as fresh fruits, vegetables, milk, and meat continue to be exempt from GST. However, the GST Council has introduced major changes for processed, packaged, and luxury food items. The key updates are outlined below:

Here are a few simple, generic examples to illustrate how GST is applied in the Indian context:

Example 1: Food order from a restaurant (via delivery app)

• Cost of food: Rs. 500
• GST on food (5%): Rs. 25
• Delivery charge: Rs. 40
• GST on delivery (18%): Rs. 7.20
• Total payable: Rs. 572.20

Example 2: Takeaway order (no delivery involved)

• Cost of food: Rs. 300
• GST on food (5%): Rs. 15
• Total payable: Rs. 315

Example 3: Packaged/branded food item

• Cost of packaged food (e.g. branded snack): Rs. 200
• GST (assume 12% for this category): Rs. 24
• Total payable: Rs. 224

Example 4: Higher GST category item

• Cost of premium packaged food: Rs. 400
• GST (assume 18%): Rs. 72
• Total payable: Rs. 472

In all these cases, the GST is included in the final bill shown to the customer, and the platform collects and remits it to the government.

The Input Tax Credit (ITC) framework was a key focus of the September 2025 GST reforms, aiming to clarify who can claim ITC and who cannot:

• Standalone restaurants: Most standalone eateries continue to pay GST at 5% without claiming ITC. This “no-ITC” approach helps keep final bills lower for consumers.
• Specified premises (Luxury dining): Restaurants located in hotels with room tariffs above Rs. 7,500 per night are taxed at 18%. These establishments can claim full ITC on inputs such as raw materials, rent, and kitchen equipment, helping offset their higher operational costs.

• Mandatory ISD (2025): For restaurant chains with multiple outlets, the Input Service Distributor (ISD) mechanism became mandatory in 2025. This ensures that tax credits for shared services (like marketing or head office expenses) are correctly distributed across all branches, preventing revenue loss.

  
  

Exemptions for GST on restaurant

The 56th GST Council meeting introduced important GST exemptions aimed at reducing the cost of living. While restaurant services are generally taxable, certain inputs and settings now receive greater relief:

• Essential Food Exemption: A key 2025 update moved all Indian breads (roti, paratha, parotta, khakhra), UHT milk, and pre-packaged paneer to the NIL (0%) GST rate. This helps lower the base cost of ingredients for restaurant owners.
• Institutional Exemptions: Canteens in educational institutions (schools and colleges) and messes in government hospitals remain exempt from GST.
• Charitable Services: Free community meals (Langar) and food served at religious institutions continue to be fully exempt.
• Small Business Threshold: The GST registration threshold remains Rs. 20 lakh (Rs. 10 lakh for certain states). Micro-restaurants earning below this limit are not required to register or pay GST.

How to calculate GST on restaurant bill using a GST calculator

Calculating GST on restaurant bills is quick and easy with an online GST calculator. Just enter the bill amount, choose the applicable GST rate (5% or 18%), and the calculator will instantly display the GST charged and the total payable amount. Using a GST calculator helps both restaurant owners and customers ensure accurate billing and maintain proper tax compliance.

In the GST system, service tax and VAT will be combined into a single rate, but you may still see a service charge on your food bill. Below is a simple comparison of how your food bill will look before and after GST.

We have assumed that VAT is charged at 100% of the value with no reductions.

In this example, the total amount payable to the tax authorities under the current system comes to Rs. 950. But under GST, the amount you pay will be just Rs. 250, thanks to the reduced rates.