The restaurant GST question is not really about the rate. It is about input tax credit, because a 5% rate without credit can cost you more than an 18% rate with it, depending entirely on your cost structure.
Restaurants
| Type | Rate | Input tax credit |
|---|---|---|
| Standalone restaurant, air-conditioned or not | 5% | Not available |
| Restaurant in a hotel where the room tariff is below ₹7,500 | 5% | Not available |
| Restaurant in a hotel where the room tariff is ₹7,500 or above | 18% | Available |
| Outdoor catering, standalone | 5% | Not available |
| Banquet hall with food and decor | 18% | Available |
Hotel rooms
| Room tariff per unit per day | GST |
|---|---|
| Up to ₹1,000 | Exempt |
| ₹1,001 to ₹7,500 | 5%, without input tax credit |
| Above ₹7,500 | 18%, with full input tax credit |
The specified premises declaration
Since 1 April 2025, restaurants in specified premises may opt to charge 5% without input tax credit instead of the default 18% with credit, by filing a declaration on the GST portal. The choice is not obvious and should be made on your actual numbers rather than by assuming the lower rate is better.
The arithmetic is simple enough to do properly. If your input tax credit on rent, equipment, utilities and supplies is worth more than 13% of your turnover, the 18% rate with credit leaves you better off. If it is not, the 5% rate does. For most standalone operations with modest rent, 5% wins. For a large operation in expensive premises, it frequently does not.
What the 5% rate means for purchasing
Without input tax credit, every rupee of GST you pay on rent, equipment, packaging and services is a real cost rather than a recoverable one. That changes several decisions.
- Equipment purchases carry their full GST as a cost, so the timing of a large purchase matters less than it would otherwise
- Rent from a registered landlord carries GST you cannot recover, which should be reflected in what you are willing to pay
- Buying from unregistered suppliers stops being a disadvantage, because you were never going to claim the credit anyway
Delivery platforms
For supplies made through an e-commerce operator such as Zomato or Swiggy, the operator is liable to pay the GST on restaurant service supplied through its platform. The restaurant does not charge GST on those orders but must still report them correctly, and the treatment differs from dine-in and direct takeaway on the same menu.
Registration
A restaurant is a service provider for threshold purposes, so registration becomes compulsory above ₹20 lakh of aggregate turnover in a normal category state such as Haryana. Selling through a delivery platform makes registration compulsory regardless of turnover, which catches most cloud kitchens from the first month.
Questions About GST For Restaurants And Hotels
Statutory figures on this page verified 11 August 2026.