GST on Restaurant Bill in 2026: Food Rate, Hotels, Apps and Service Charge

What is the GST rate on a restaurant bill in 2026?

Most restaurant bills carry GST at 5% with no input tax credit (ITC) for the restaurant, shown as 2.5% CGST plus 2.5% SGST. Only restaurant service at “specified premises”, broadly hotels with costly rooms, is taxed at 18% with ITC.

The rates sit in serial 7 (heading 9963) of Notification 11/2017-Central Tax (Rate). Notification 20/2019-Central Tax (Rate) set the current items from 1 October 2019: item (ii), restaurant service other than at specified premises, at 2.5% central tax without ITC, and item (vi), restaurant service at specified premises, at 9%. An Explanation makes the 5% mandatory, so a restaurant under item (ii) cannot choose 18%.

The 56th GST Council did not change these rates. Notification 15/2025-Central Tax (Rate), in force from 22 September 2025, left item (ii) untouched, so restaurant food is still 5%.

From 1 November 2026, Notification 06/2026-Central Tax (Rate), issued after the 57th Council meeting, keeps 5% but lets a restaurant take credit on restaurant service bought from another restaurant outside specified premises; other credit stays barred. The CBIC explanatory notes list restaurants, cafes and takeaway under SAC 996331.

When does a restaurant in a hotel charge 18% GST?

A restaurant charges 18% only when it is at a “specified premises”: a hotel premises where any room was supplied above seven thousand five hundred rupees per unit per day in the previous financial year, or which the hotel has declared to be a specified premises.

Notification 05/2025-Central Tax (Rate) rewrote the definition in paragraph 4(xxxvi) from 1 April 2025, replacing the old “declared tariff” test with the actual value of supply and adding an opt-in.

• Opt-in (Annexure VII): filed by a registered hotel between 1 January and 31 March for the next financial year, per premises.
• New registration (Annexure VIII): filed within fifteen days of the registration acknowledgement.
• Opt-out (Annexure IX): the choice continues until the hotel opts out in the same window.
• Standalone restaurants: cannot opt in. Notification 15/2025 added an Explanation, from 1 April 2025, that “premises” means a place from where hotel accommodation is supplied.

The Council’s press release of 3 September 2025 says this makes clear that a stand-alone restaurant cannot declare itself a specified premises to pay 18% with ITC. For the room side of a hotel bill, see our guide to GST on hotel room tariff.

What is the GST on takeaway, cloud kitchens and food delivery apps?

Takeaway, parcel and door delivery food is restaurant service at the same 5%. On a food app order, the app, as the e-commerce operator, pays that GST instead of the restaurant.

The definition of restaurant service covers food supplied “whether for consumption on or away from the premises”. Circular 164/20/2021-GST uses this to confirm that cloud kitchens supply restaurant service at 5% without ITC. It also treats an ice cream parlour selling ready-made ice cream as a seller of goods, taxed at the goods rate.

From 1 January 2022, Notification 17/2021-Central Tax (Rate) added restaurant service, other than by restaurants at specified premises, to the services on which the e-commerce operator pays tax under section 9(5). Circular 167/23/2021-GST sets out what follows:

• The app issues the invoice for the restaurant service and pays the GST in cash, not from its own credit.
• This applies even when the restaurant is not registered for GST.
• The restaurant still counts these sales in its aggregate turnover for the registration threshold.

Delivery fees are separate supplies. Local delivery stayed at 18% on 22 September 2025, and from 1 November 2026 06/2026 adds a 5% without ITC entry for some delivery services supplied through an e-commerce operator, and 09/2026 changes which delivery services the operator pays tax on. The delivery line’s rate depends on who supplies it.

Can a restaurant add service charge, packing or LPG charges to the bill?

Service charge cannot be added by default. Packing charged by the restaurant can be billed, and it is part of the taxable value, so it is taxed at the same rate as the food.

The Central Consumer Protection Authority’s guidelines of 4 July 2022 say a hotel or restaurant shall not add service charge automatically or by default, or under any other name, must tell customers it is voluntary, and cannot restrict entry or service over it. Nor may it be added to the food bill with GST levied on the total. A PIB release of 10 January 2026 reports that the Delhi High Court upheld them on 28 March 2025.

• Service charge on the bill: ask for it to be removed, or complain to the National Consumer Helpline on 1915 or through the e-daakhil portal.
• LPG, gas or fuel charges: a CCPA advisory of 25 March 2026 says these may not be added by default, and that the menu price is the final price, exclusive only of applicable taxes.
• Packing charges: Section 15(2)(c) of the CGST Act includes incidental expenses, including packing, charged by the supplier in the value of supply.

What is the GST rate on outdoor catering and banquet food?

Outdoor catering at weddings, events and functions is taxed at 5% without ITC, like restaurants, unless the caterer provides hotel accommodation at specified premises or is located in one. Then it is 18% with ITC.

Items (iv) and (v) of serial 7 cover outdoor catering, alone or with renting of a marriage hall, pandal, shamiana or similar place, at premises other than specified premises, at 2.5% central tax without ITC. Item (vi) puts the same supplies by hotels with specified premises, or by suppliers located in one, at 9%.

From 1 November 2026, Notification 06/2026 lets a caterer at 5% take credit on outdoor catering bought from another caterer, but only up to tax at 2.5% central tax. Function rooms in hotels are covered in our hotel GST guide.

How does the composition scheme work for restaurants?

A small restaurant can pay a flat 5% of its turnover (2.5% CGST plus 2.5% SGST) under composition, if its aggregate turnover in the previous financial year was not above one crore and fifty lakh rupees. It cannot charge GST on its bills.

Section 10 of the CGST Act and Rule 7 set 2.5% central tax on turnover for food served as part of a service (paragraph 6(b) of Schedule II). Notification 14/2019-Central Tax fixes the limit at one crore and fifty lakh rupees, or seventy-five lakh rupees in eight listed states, including Uttarakhand and most north-eastern states.

• No tax on the bill: under section 10(4) it cannot collect tax from customers or take ITC.
• Bill of supply: Rule 5 requires the words “composition taxable person, not eligible to collect tax on supplies” at the top of each bill.
• Signboard: “composition taxable person” must also be displayed at each place of business.
• Limits: no inter-state outward supplies, and section 10(2)(d) restricts supplies through an e-commerce operator that collects tax at source; check with your CA before listing on a food app.

Under section 10(3), the option lapses from the day turnover in the year crosses the limit.

How do you read a restaurant GST bill and check the tax?

Take the food total after any discount and add 2.5% CGST and 2.5% SGST. On a bill of 100, GST is 5 and the total is 105. At a specified premises the same bill shows 9% plus 9%, so GST is 18 and the total is 118.

1. Check that the restaurant’s GSTIN is printed; a bill that charges GST without one is worth querying.
2. Check the rate: 2.5% plus 2.5% for most restaurants, 9% plus 9% only at a specified premises.
3. Check that no service charge is added by default, and no GST is worked out on one.
4. Check liquor lines: section 9(1) keeps alcoholic liquor for human consumption outside GST, and taxed under state law.
5. A composition restaurant’s bill shows no GST at all.

Can a business claim this GST back? Usually not. Section 17(5)(b) blocks ITC on food and beverages and outdoor catering, except where they are used to make an outward supply of the same category or as part of a taxable composite or mixed supply, or where a law obliges the employer to provide them to employees. Compare GST on Google Ads invoices, where credit is normally available.

How DVM Techno Can Help

DVM Techno is a web development company in Sector 84, Gurgaon, with a branch in Kasni, Jhajjar. Our cafe website design service builds sites for cafes and small restaurants with the menu as web text that staff can edit from a phone, a WhatsApp order button, table booking, outlet pages with a map and your FSSAI number in the footer. An editable menu makes it easy to state whether prices are plus GST. Our page plan for Gurgaon cafes covers the rest. Your GST treatment stays with your CA.

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