Intro Paragraph:
Understanding GST on restaurant bills is crucial for both diners and food businesses in India. The GST Council and CBIC issue frequent clarifications on tax rates, input credits, and special premises conditions. This blog breaks it down simply so you never overpay or undercharge.
GST on Restaurant Bills: The Basics
- Standard GST Rate:
- 5% (without ITC) for most standalone restaurants.
- 18% (with ITC) if the restaurant is inside hotels with room tariff above ₹7,500/day.
- Takeaway & Delivery:
- Same 5% rate generally applies.
- Outdoor Catering:
- 18% GST applicable (ITC allowed).
- Room Service:
- Treated same as restaurant service inside hotel — follow room tariff condition.
Reference: CBIC Notification No. 11/2017-CT (Rate) & subsequent clarifications.
Key Rules Diners Should Know
Always check if GST is being charged properly:
- Standalone or small dine-ins — expect 5%.
- Luxury hotels — expect 18% if room condition is met.
Look for GSTIN on the bill — mandatory for tax collection.
Service charge is not GST — it’s voluntary and goes to the restaurant.
Key Rules Restaurants Should Follow
- No ITC for 5% scheme: Restaurants opting 5% rate must forego input tax credit.
- Display Tax Split Clearly: Bill must separately show value & GST.
- Room Tariff Link: If running a restaurant in a hotel, check room tariff daily to apply correct GST.
CBIC Clarification: Refer to FAQ dated March 31, 2025.
Practical Tip: Avoid Overcharging
Many restaurants still wrongly apply 18% without checking eligibility. Consult your CA or tax advisor. Mistakes lead to penalties under CGST Act.
Quick Table: GST Rates on Restaurant Services
| Type of Service | GST Rate | ITC Available? |
|---|---|---|
| Standalone dine-in/takeaway | 5% | No |
| Restaurant in luxury hotel | 18% | Yes |
| Outdoor catering | 18% | Yes |
| Room service in hotel | Same as restaurant |
Case Law Highlight
📌 Hotel Association of India vs. UOI (2022) — Upheld CBIC’s condition linking GST rate to room tariff. Read full text on cbic.gov.in.
FAQs: GST on Restaurant Bills
Q1: Is GST compulsory for all restaurants?
A1: Yes, if turnover exceeds registration threshold.
Q2: Can restaurants charge service charge and GST together?
A2: Yes. Service charge is voluntary; GST must be on taxable value.
Q3: Do delivery platforms collect GST?
A3: Yes, since Jan 1, 2022, platforms like Zomato/Swiggy collect and pay GST for restaurant services.
Efiletax Expert View
👉 “Restaurants often overlook room tariff conditions. Always update front desk and billing team to apply the right GST. A small error can cost big in audits.” — Efiletax Compliance Desk.
Conclusion
Understanding GST on restaurant bills protects both diners and food businesses. Stay compliant, avoid disputes, and consult experts when in doubt.
✅ Need help with GST registration or compliance? Talk to Efiletax experts today!
Summary
GST on restaurant bills depends on type and premises: 5% without ITC for regular dine-in; 18% with ITC inside luxury hotels. Always check GSTIN on bills and understand service charge vs GST. Follow CBIC rules to avoid penalties.