GST rates on restaurants, current rules
Restaurant GST in India was simplified in November 2017 (23rd GST Council meeting) and refined further by the 22 September 2025 amendment. The current structure per CBIC Notification 11/2017 - Central Tax (Rate) as amended:
- Standalone restaurants, AC or non-AC, with or without liquor licence: 5% GST without input tax credit. This covers casual dining, fine-dining, takeaway, dhaba, sweet shops and QSR chains.
- Restaurants inside specified-premises hotels (any room declared tariff above ₹7,500/night): 18% GST with full ITC.
- Outdoor catering services: 18% GST with ITC, treated separately from regular restaurant supply.
- Food delivered through aggregators (Zomato, Swiggy): 5% GST on the food, collected by the aggregator under Section 9(5) of the CGST Act (effective January 2022). Delivery fee is separately taxed at 18%.
The 5% rate is a "no-ITC" rate, the restaurant cannot claim credit on input purchases (rent, raw materials, equipment). The 18% rate applies only to specified-premises restaurants and allows ITC. The earlier AC vs non-AC distinction was eliminated by the November 2017 amendment.
Service charge, your rights
Service charge is voluntary, not mandatory, per the Central Consumer Protection Authority (CCPA) guidelines issued in July 2022. Restaurants cannot force service charge as a default add-on, cannot make it a condition of entry, and cannot refuse to remove it on request. If a bill includes an auto-added service charge:
- You can request removal before payment.
- You can pay and file a complaint on the National Consumer Helpline (1915) or the E-Daakhil portal.
- The Delhi High Court has upheld the CCPA guidelines (March 2025), service charge is not legally enforceable.
Our generator treats service charge as an optional field defaulted to 0%. When enabled, it appears on a clearly-marked line, not hidden in totals.
Tips vs service charge
Tips are voluntary payments to staff and are not subject to GST. They should appear on the receipt only if the guest requests them added to the card/UPI payment. Don't confuse service charge (a restaurant revenue line subject to GST) with a tip (staff gratuity, not GST-able).
Liquor on restaurant bills
Liquor is outside the GST regime entirely, it's taxed under state excise. A restaurant with a liquor licence still falls in the 5% standalone slab on food (and 18% only if specified-premises). Liquor lines on the bill carry no CGST/SGST/IGST. Mineral water, soft drinks and packaged food on the menu carry their normal GST rates.
What makes a restaurant bill valid for meal reimbursement
For an employer to reimburse a meal expense, the bill typically needs:
- Restaurant name, address, and GSTIN (for GST-registered restaurants)
- Date and time of the meal
- Itemised dishes with quantities and unit prices
- Subtotal before GST
- CGST + SGST split (intra-state) or IGST (inter-state, rare for dining)
- Service charge line if any, clearly marked
- Grand total
Company-specific meal policies often add further constraints: per-person cap, attendee names, business justification. Those are policy decisions outside the bill itself.
Can your company claim ITC on a restaurant bill?
Under Section 17(5)(b) of the CGST Act, ITC is blocked on food and beverages, with two narrow exceptions: (a) if supplying meals is part of the company's outward taxable supply (e.g. a catering business), and (b) if it's an element of a taxable composite supply. For most companies, there is no ITC on restaurant meals. The GSTIN on the bill is for record-keeping and audit, not credit.
Common mistakes
- Applying 18% GST to a standalone AC restaurant. AC vs non-AC distinction was removed in 2017, standalone is always 5%.
- Treating a liquor-licensed restaurant as 18%. Liquor licence alone does not push the rate to 18%. Only specified-premises status does.
- Auto-adding service charge without disclosure. Illegal per CCPA guidelines and recent Delhi HC ruling.
- Merging GST into the subtotal. Non-compliant with Rule 46(l), CGST and SGST must be shown as separate lines.
- Charging GST on liquor. Liquor is outside GST. State excise applies.