Standalone restaurants in India charge 5% GST with no input tax credit (ITC). Restaurants inside hotels where any room tariff is ₹7,500 or more charge 18% with ITC. Hotel room GST is 12% for tariffs up to ₹7,500 per night and 18% above it — the earlier exemption for rooms under ₹1,000 was withdrawn in July 2022. GST rates are revised periodically, so always confirm the current rate for your specific case with a qualified CA.
GST on restaurant service
For most eateries — standalone restaurants, cafés, cloud kitchens, and restaurants inside modest hotels — the rate on food and beverage service is 5% GST, without input tax credit. The AC / non-AC distinction that used to matter was removed years ago; nearly all restaurant service now sits at this single 5% rate.
The exception is a restaurant located inside a hotel where any room is tariffed at ₹7,500 or more per night. That restaurant charges 18% GST, with input tax credit. The classification follows the hotel’s room pricing, not the restaurant’s own prices.
What “no input tax credit” actually costs you
The 5% rate sounds generous until you understand the trade-off. Input tax credit (ITC) lets a business offset the GST it pays on purchases against the GST it collects on sales. At 5% without ITC, a restaurant cannot reclaim the GST it pays on rent, equipment, packaging, or supplies — that tax becomes a real cost baked into your margins. The 18%-with-ITC restaurants can reclaim it. So the “lower” 5% rate is not automatically cheaper overall; it simply moves where the tax lands. Factor the un-creditable GST into your cost base when you price the menu.
GST on hotel rooms
| Room tariff per night | GST rate |
|---|---|
| Up to ₹7,500 | 12% |
| Above ₹7,500 | 18% |
The rate follows the actual tariff charged for the room. Note the exemption that once applied to rooms under ₹1,000 a night was withdrawn in July 2022, so budget rooms are now taxable too. Hotels can generally claim input tax credit on the room-service side.
Common GST mistakes in hospitality
- Charging the wrong restaurant rate. Applying 18% when you are a standalone 5% restaurant (or vice-versa) creates refund headaches and compliance risk.
- Claiming ITC you are not entitled to. A 5%-without-ITC restaurant claiming input credit is a classic error that surfaces in scrutiny.
- Mis-classifying a hotel restaurant. The ₹7,500 test is about the hotel’s room tariff, not the restaurant’s dishes.
- Ignoring the composition scheme. Small restaurants under the turnover threshold may opt for the composition scheme at a lower effective rate with simpler filing — worth discussing with your CA if you qualify.
A necessary caveat
GST law changes, and the rates and thresholds above reflect the widely-applied position at the time of writing. This guide is general information, not tax advice. Before you set prices, file returns, or make an ITC decision, confirm the current rates and your specific classification with a qualified chartered accountant. The GST calculator helps you apply a rate to a bill, but the right rate for your business is a professional call.
GST Calculator for Hospitality
Add GST to a base price, or extract GST from a tax-inclusive amount, with the CGST/SGST split. Built for Indian restaurant and hotel billing.
Step by step
Apply the right GST to a hospitality bill.
- Identify your format. Standalone restaurant, cloud kitchen, restaurant inside a premium hotel, or hotel room service.
- Find the applicable slab. 5% (no ITC) for most restaurants; 18% (with ITC) for restaurants in hotels with a ₹7,500+ room tariff; 12% or 18% for hotel rooms by tariff.
- Apply it to the taxable value. Calculate GST on the pre-tax bill amount at the correct rate.
- Confirm ITC eligibility. Check whether your rate allows input tax credit, and confirm your position with a CA.
Frequently asked questions
What is the GST rate on restaurant food in India?
Most restaurants — standalone eateries, cafés and cloud kitchens — charge 5% GST without input tax credit. Restaurants inside hotels where any room tariff is ₹7,500 or more charge 18% with input tax credit. Always confirm the current rate with a CA, as GST is revised periodically.
Do restaurants get input tax credit?
Restaurants on the 5% rate do not get input tax credit, so GST paid on rent, supplies and equipment becomes a cost. Restaurants on the 18% rate (those inside premium hotels) can claim input tax credit.
What is the GST on hotel rooms in India?
Hotel rooms are taxed at 12% for tariffs up to ₹7,500 per night and 18% above ₹7,500. The earlier exemption for rooms under ₹1,000 was withdrawn in July 2022. Confirm current slabs with a qualified accountant.
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