Understanding the Goods and Services Tax (GST) on food items and restaurant services in India is essential for both consumers and business owners. This guide breaks down the applicable GST rates and rules in a straightforward manner.
GST on Restaurant Services
The GST rate for restaurant services varies based on the type and location of the establishment:
1. Standalone Restaurants (AC or Non-AC)
- GST Rate: 5%
- Input Tax Credit (ITC): Not available
- Includes: Dine-in, takeaway, and home delivery
2. Restaurants within Hotels
- If room tariff is less than ₹7,500 per night:
- GST Rate: 5%
- ITC: Not available
- If room tariff is ₹7,500 or more per night:
- GST Rate: 18%
- ITC: Available
3. Outdoor Catering Services
- GST Rate: 18%
- ITC: Available
4. Cloud Kitchens and Online Food Delivery
- GST Rate: 5%
- ITC: Not available
- Note: GST is collected by food aggregators like Zomato and Swiggy on behalf of restaurants.
5. Alcoholic Beverages
- GST Applicability: Not covered under GST
- Taxation: Subject to state excise duty and VAT
GST on Food Items
GST rates on food items depend on their type and processing:
1. Essential Food Items
- Examples: Fresh fruits, vegetables, milk, eggs, unbranded rice, wheat, pulses
- GST Rate: 0% (Exempted)
2. Packaged and Branded Food Items
- Examples: Branded rice, wheat, pulses
- GST Rate: 5%
3. Processed and Ready-to-Eat Foods
- Examples: Frozen vegetables, edible oils, packaged butter, paneer
- GST Rate: 5%
4. Preserved and Instant Foods
- Examples: Fruit juices, preserved vegetables, instant noodles
- GST Rate: 12%
5. Luxury and Indulgent Foods
- Examples: Chocolates, ice cream, flavored milk
- GST Rate: 18%
6. Aerated Beverages and Soft Drinks
- Examples: Cola, soda, energy drinks
- GST Rate: 28% + applicable cess
Key Takeaways
- Input Tax Credit (ITC): Available only for services taxed at 18% GST, such as restaurants in hotels with room tariffs of ₹7,500 or more and outdoor catering services.
- Service Charge: Not governed by GST; it’s an additional charge levied by restaurants at their discretion.
- GST on Alcohol: Alcoholic beverages are outside the purview of GST and are taxed separately by state governments.
Understanding these GST rates helps in better financial planning, whether you’re dining out, ordering in, or managing a food-related business.
