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GST on Food Items and Restaurants : Rules and Rates in 2025

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GST ON Food And Restaurant

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Introduction

GST is a consumption-based tax levied on the value added at each stage of production and distribution. In the case of food and restaurants, the GST is levied based on the type of restaurant and the services provided. The GST rates for restaurants serving food and beverages are 5% for non-air-conditioned restaurants and 18% for air-conditioned restaurants. Additionally, the GST rate is 18% for restaurants serving alcoholic beverages. Furthermore, outdoor catering services are also subject to a GST rate of 5%.

 

What is GST on Food and Restaurants?

If you are a customer or a business owner running a food business, it is important to understand what is GST on restaurants. The government levies the GST on restaurants based on the restaurant's establishment type. Currently, the GST on restaurants is 5%, 12% and 18%, which the restaurants are liable to pay to the government when filing for taxes. 

The introduction of GST on restaurants has replaced the Service Tax and Value Added Tax regime on food services. The basic restaurant GST rates are mentioned above, which the restaurants collect from the end customers and deposit with the government. 

However, small restaurants with an annual turnover of up to Rs. 1.5 crores can opt for the composition scheme under GST and pay a fixed tax rate lower than the regular GST rate. Restaurants can also claim Input Tax Credit (ITC) on the GST paid on their inputs, such as raw materials, rent, and utilities, subject to certain conditions.
 

What were the Original GST Rules for Restaurants?

The Indian government launched the Goods and Services Tax (GST) in July 2017 to rectify the tax payments for all goods and services. Under the then announcement, restaurants were categorised into three different restaurant GST rates. They were: 

●    The GST was 12% for a restaurant that did not have air conditioning. 
●     The GST was 18% for a restaurant with air conditioning and a liquor licence. 
●    The GST was 28% for restaurants within the five-star hotels' category. 

However, the Indian government allowed all restaurants to leverage the input tax credit. 

GST rates on Food, Beverage Services, and Accommodation

Here is a detailed table to understand the GST rates on food, beverages, services and accommodation.

Particulars Applicable GST Rate
Food services by restaurants that may or may not have air conditioning (including takeaway) 5% with no Input Tax Credit
Any food or drink served at the canteen/cafeteria/mess operating on a contractual basis in an office, school, industrial unit, etc., when the contract is not occasional or event-based 5% with no Input Tax Credit
Food services provided by a restaurant operating within a hotel with a room tariff of Rs 7,500 or more 18%
Food services provided by a restaurant operating within a hotel with a room tariff of Rs 7,500 or less 5% with no Input Tax Credit
Food service provided by the Indian railways on platforms and trains 5% with no Input Tax Credit
Food services provided by a licenced entity on a premise utilised for organising a function while renting the premise 18%
Food services provided at events, conferences, exhibitions and indoor or outdoor functions that are occasional and event-based 18%
Any other food, beverage service and accommodation 18%

GST on Food items

Here is a detailed table to understand the GST on restaurants for food items: 

Particulars Applicable GST Rate
GST on freeze/fresh vegetables NIL
GST on non-container dried leguminous packed vegetables(shelled), whether skinned/split or not NIL
GST on fruits such as apples, oranges, grapes, etc. NIL
GST on non-vegetarians food items (whether fresh or chilled) NIL
GST on eggs in shells (whether fresh, cooked or preserved) NIL
GST on cream, unsweetened milk (whether pasteurised or unpasteurised) NIL
GST on packed vegetables in a container (whether steamed, boiled or uncooked) NIL
GST on vegetables preserved using means unsuitable for immediate human consumption NIL
GST on contained packed meat having a brand name or trademark 5%
GST on eggs not in the shells or egg yolks cooked or boiled by steaming 5%
GST on container-dried leguminous packed vegetables having a brand name or trademark ()whether skinned/split or not) 5%
GST on vegetables such as thyme, curry leaves, ginger (not fresh), etc. 12%
GST on vegetables, nuts, fruits and edible parts of plants that are preserved by a means 12%
GST on flour-based food items, including less than 40% cocoa of total weight 18%
GST on chocolate and chocolate-based products 18%

 

 

Impact of GST on Restaurant and Food Items

The Goods and Services Tax (GST) is a comprehensive tax system that has replaced multiple indirect taxes in India. GST on restaurants has significantly impacted the restaurant and food industry in India. 

Here are some of how GST on restaurant services and food items has affected the industry:

●    Simplified Taxation

GST on restaurants has simplified taxation by replacing multiple taxes with a single tax. GST on restaurant food has made it easier for restaurants and food businesses to comply with tax regulations and has reduced the cost of compliance. 

However, the current restaurant GST rates are higher than those applicable under the previous tax system. This has increased the tax burden for restaurants and food businesses.

●    Lower Tax Liability

Under GST on restaurant services, restaurants and food businesses can claim Input Tax Credits for taxes paid on purchases, helping reduce the overall tax liability for restaurants and food businesses.

●    Increased Transparency

ST has brought about greater transparency in the food industry by requiring businesses to maintain proper records and file regular tax returns, helping reduce tax evasion and increase compliance.

●    Impact on Prices 

●    GST on restaurants has had a mixed impact on prices in the restaurant and food industry. While the tax rates for some items have increased, the Input Tax Credit has helped reduce prices for other items. Overall, the impact on prices has been moderate.
 

Conclusion:

GST has brought about significant changes in the restaurant and food industry. While it has simplified taxation and increased transparency, it has also increased the tax burden for businesses. However, with the ability to claim the Input Tax Credit, the impact on prices has been mixed. 

Despite the initial challenges, the GST system has brought about a much-needed system overhaul and may benefit the industry in the long run. As the government continues to refine the GST system, the restaurant GST rates may change in the coming years. 
 

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Frequently Asked Questions

The highest rate of GST applicable to the food segment is 28%, levied on caffeinated and carbonated beverages. 

There are numerous food items, such as fresh fruits and vegetables, with no liability to pay GST. You can refer to the table above to find all the food items with NIL charge of GST. 

The rate of GST applies to chocolate and cocoa products is 18%. 

GST applies to takeaway food with rates of 5% and 18%, depending on the restaurant’s location. 

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