GST on Restaurant Food in 2026: 5% or 18%? The Rates, the Bill and the Rules

Ask ten people what GST a restaurant charges and you will hear "12% without AC, 18% with AC" from at least half of them. Some well-known finance websites still say the same in their FAQs. That rule died in November 2017. Since then the AC, the liquor licence and the star rating on the signboard have had nothing to do with the GST on your food bill.

This guide settles the rate for every common kind of eating place, shows a restaurant bill worked out line by line, and covers the questions that trip up owners: Swiggy and Zomato orders, service charge, hotel restaurants, composition restaurants and the counter that sells packed snacks next to the dining area.

The restaurant GST rate, by type of outlet

On an intra-state bill, 5% appears as 2.5% CGST + 2.5% SGST, and 18% as 9% CGST + 9% SGST. The service code (SAC) for restaurant service is 996331.

The 5% comes without input tax credit, and you cannot opt for 18%

"Without ITC" means the GST you pay on rent, kitchen equipment, packaging, gas and raw material cannot be set off against the 5% you collect. That tax is a cost, and it belongs in your menu pricing.

Many owners ask whether they can choose 18% to get credit back. A standalone restaurant cannot. The 18% rate follows the premises, not the owner's preference, and only a supplier of hotel accommodation can declare a premises "specified". The Karnataka GST department's FAQ on the April 2025 change gives the exact example: a mall owner cannot declare the mall specified, and restaurants in the mall outside a declared hotel premises "will continue to pay GST at the rate of 5% without ITC".

What counts as "specified premises" from 1 April 2025

The definition was rewritten by Notification 05/2025-Central Tax (Rate), effective 1 April 2025. A premises is specified for a financial year if:

1. the hotel supplied any unit of accommodation at a value above ₹7,500 per unit per day in the previous financial year (actual price charged, not the published tariff), or
2. a registered hotelier filed a declaration (Annexure VII) between 1 January and 31 March of the previous year, declaring the premises specified, or
3. a new hotelier applying for registration filed a declaration (Annexure VIII) within 15 days of the registration acknowledgement.

If any of these applies, every restaurant inside that premises charges 18% with ITC for the whole year. A hotel crossing ₹7,500 for even one room-night is automatically in, with no declaration needed. Before April 2025 the test was the declared tariff of a room; dynamic room pricing made that unworkable, so the law now looks at what was actually charged last year.

For hotels below the line, the rooms themselves became cheaper on 22 September 2025: accommodation up to ₹7,500 a night moved to 5% without ITC. Their restaurants stay at 5%.

A restaurant bill, worked out

Here is a family dinner at a standalone restaurant in Pune. The restaurant is GST-registered and on the regular scheme, so the bill is a tax invoice.

Check it yourself: 2.5% of ₹837 is ₹20.925, which rounds to ₹20.93 for each of CGST and SGST, so the tax is ₹41.86. ₹837 + ₹41.86 = ₹878.86, rounded to ₹879. The lassi carries the same 5% as the thali: inside a restaurant, a drink served with the meal is part of the restaurant service, not a separate sale of goods.

What else the tax invoice needs, under Rule 46: the restaurant's name, address and GSTIN, a serial number, the date, the SAC, the taxable value, the rate and the tax amounts, and the place of supply. If the diner is a registered business and gives you its GSTIN, add their name, address and GSTIN too. The GST invoice format guide lists every field, and our post on how to calculate GST shows the formula for working GST back out of an inclusive menu price.

Restaurants also have to print their 14-digit FSSAI number on bills and cash memos. Our FSSAI registration guide covers that rule.

Swiggy, Zomato and other food delivery apps

Since 1 January 2022, restaurant service supplied through an e-commerce operator is covered by Section 9(5) of the CGST Act. The app, not the restaurant, collects and pays the 5% GST on the food and issues the bill to the customer.

What this means for you:

• Do not charge GST again on the food value of app orders, and do not pay it in your own GSTR-3B. Report these sales in the separate table for Section 9(5) supplies in GSTR-1, as your CA will show you.
• The app's commission to you is a separate service, billed by the app at 18%. Because your own sales are at 5% without ITC, you generally cannot claim that 18% back. It is a cost.
• The delivery fee the app charges the customer for local delivery also became subject to 18% GST, paid by the app under Section 9(5), from 22 September 2025.

Your own phone and WhatsApp orders, delivered by your own staff, are normal sales: 5% on your bill, paid by you.

Service charge: voluntary, and taxed if paid

A restaurant cannot add a service charge automatically or by default. The Central Consumer Protection Authority's guidelines of July 2022 say so, and the Delhi High Court upheld them in March 2025, confirming that service charge must be voluntary and cannot be collected under another name. The CCPA has since acted against restaurants that kept levying it.

If a customer chooses to pay a service charge and it is billed, it is part of the value of your restaurant service, so GST at the same rate (5%) applies to it. A tip handed directly to staff and never billed is not your supply.

Bars, alcohol and the two-tax bill

Alcoholic liquor for human consumption is outside GST. States tax it through excise and VAT. A bar or a restaurant with a liquor licence therefore runs two taxes on one table:

• Food and soft drinks: 5% GST (or 18% inside specified premises).
• Beer, wine and spirits: state VAT, at your state's rate, with no CGST or SGST.

Keep them as separate sections, or separate bills, so that the GST figures in your returns match your GST bills exactly. The liquor licence no longer pushes your food to 18%; that was part of the pre-2017 rule.

Packed goods at the counter versus restaurant service

Many restaurants also sell sealed products over a counter: bottled water, cold drinks, packed namkeen, chocolates. Whether that is "restaurant service" or "sale of goods" decides the rate.

• Served as part of a meal or order at the restaurant: restaurant service, 5%.
• Sold over a separate retail counter as sealed goods, with no service element: sale of goods at the goods rate. Aerated drinks are 40%, packed namkeen and chocolates 5%, and so on. See our GST rates list for the item-wise rates.

Sweet shops and bakeries with a few tables sit on the line. Since September 2025 most sweets, bakery items and ice cream are taxed at 5% as goods, so for most items the rate is the same either way. Where an item carries a different goods rate, or you have a separate takeaway counter and dining area, ask your CA which side each sale falls on. A 2021 CBIC circular already held that an ice cream parlour selling factory-made ice cream is selling goods, not restaurant service, which shows how the line is drawn.

Composition scheme for restaurants

Small restaurants can opt for the composition scheme, which is simpler but changes the bill completely.

Under composition, the restaurant must not collect any tax from the customer. The same dinner would look like this:

The heading is Bill of Supply, and it must carry the words "composition taxable person, not eligible to collect tax on supplies". The customer pays ₹837. The restaurant later pays 5% of that, ₹41.85, to the government through CMP-08. That is why composition restaurants usually price their menus a little higher. Our GST composition scheme guide covers eligibility and the switch.

Do you need GST registration at all?

Restaurant service is a service, so the threshold is ₹20 lakh of aggregate turnover in a year (₹10 lakh in special category states), not the ₹40 lakh limit for goods. A small dhaba or tea stall below that line does not have to register. If it is not registered, it must not charge GST: its bill is a plain bill, and calling it a tax invoice would be collecting tax it has no right to collect. Our GST registration limit guide explains how turnover is counted, and the bill format guide shows which heading each kind of business prints.

Common mistakes on restaurant bills

• Charging 12% or 18% at a standalone AC restaurant. It is 5%. Overcharging GST is still collecting tax wrongly.
• Claiming ITC on rent or equipment while charging 5%. The 5% rate comes without credit.
• Adding service charge by default. It must be optional, and if billed, GST applies to it.
• Mixing liquor into the GST total. Liquor carries VAT, not GST.
• Charging GST on app orders that Swiggy or Zomato already taxed under Section 9(5).
• A composition restaurant showing "GST 5%" on the bill. Composition dealers cannot collect tax.
• No FSSAI number on the bill. It is mandatory for food businesses.

Billing a small restaurant on your phone

For a dhaba, a tiffin service, a small cafe or a cloud kitchen, the billing itself is simple: one rate, one SAC code, a handful of menu items. That is what BillZap does well. It is free, needs no sign-up and works offline on Android. You add your menu once with the SAC code and 5% GST, and every bill is numbered automatically, splits CGST and SGST (or IGST), and carries a UPI QR for the exact amount. The heading follows the tax: Tax Invoice when you charge GST, Bill of Supply if you are registered and not charging it, and plain Bill if you are not registered. You can share the bill as a PDF or on WhatsApp, mark it paid, and use the app in Hindi and many other Indian languages. Reports show your sales and profit.

To be clear about what it is not: BillZap is a billing app, not a restaurant POS. It has no KOT, table management, kitchen printing or Swiggy and Zomato integration. A busy restaurant running twenty tables at dinner needs a restaurant POS. A small outlet that wants correct GST bills without paying for one will find BillZap is enough.

FAQ

The bottom line

Restaurant GST in 2026 is simpler than its reputation: 5% without ITC almost everywhere, 18% with ITC only inside specified hotel premises, and nothing on your bill depends on the AC. Get the SAC code and the 5% split right once, keep liquor and app orders out of your GST totals, never force a service charge, and your bills will be correct every time.