Quick answer: a stand-alone restaurant charges 5% GST without input tax credit, and cannot opt for 18% with ITC — the GST Council clarified in September 2025 that a stand-alone restaurant cannot declare itself a 'specified premises'. The 18%-with-ITC option applies only to a restaurant inside a specified premises (a hotel where a unit of accommodation is supplied at ₹7,500 or more per night).
A stand-alone restaurant in India charges GST at 5% without input tax credit. It cannot choose 18% with ITC: the GST Council clarified in September 2025 that a stand-alone restaurant cannot declare itself a 'specified premises', so the 18%-with-ITC option is available only to a restaurant inside a specified premises. To understand how this impacts your restaurant business, it's essential to delve into the details of GST rates, HSN/SAC codes, and the implications of these rates on your pricing and compliance.
The HSN/SAC code for restaurants is 9963, which covers food and beverage services. This code is crucial for filing GST returns and ensuring compliance with GST regulations.
The tax breakdown for restaurants in India can be complex, with variations depending on the type of service provided (e.g., dine-in, take-away, or delivery) and the GST rate applicable. Below is a breakdown of the GST rates and their implications:
| Service Type | GST Rate without ITC | GST Rate with ITC |
|---|---|---|
| Dine-in Services | 5% | 18% (specified premises only) |
| Take-away and Delivery Services | 5% | 18% (specified premises only) |
Restaurants can opt for either the composition scheme or the regular scheme under GST. The composition scheme offers a simplified tax compliance process but with certain restrictions, such as not being able to claim input tax credit. The regular scheme allows for the claiming of input tax credit but involves more complex compliance procedures.
Prior to the introduction of GST, restaurants were subject to service tax and value-added tax (VAT). The pre-GST regime had a service tax rate of 15% and VAT rates varied from state to state, typically ranging from 12.5% to 20%. The introduction of GST has simplified the tax structure for restaurants, with a uniform GST rate applicable across the country.
The GST rate of 5% without ITC and 18% with ITC has significant implications for restaurant pricing. To understand the impact, consider using a GST calculator:
Restaurants often have questions regarding input tax credit and compliance under GST. Here are some answers to frequently asked questions:
To ensure compliance with GST regulations, restaurants should be aware of the following common billing mistakes:
Understanding GST rates and compliance requirements is crucial for restaurants in India to avoid penalties and ensure smooth operations. By being aware of the GST rates, HSN/SAC codes, and compliance tips, restaurants can navigate the complexities of GST and focus on providing excellent dining experiences to their customers.
5%
18%
9963
Food and beverage services
GST rates affect the overall pricing and compliance of restaurant services
Restaurant rates interact with accommodation — see GST on hotels and hotel rooms for the specified-premises rule, or browse all GST rate guides.
Rate position checked against the GST Council's 56th meeting recommendations (3 September 2025) and the CBIC rate notifications 09/2025 to 17/2025-Central Tax (Rate) dated 17 September 2025, effective 22 September 2025.
