If you run a restaurant in India, getting your GST rate wrong is a fast way to lose customer trust and invite tax headaches. The rate isn't just one flat number. It changes based on how your establishment is set up.
Standalone restaurants and most cafes charge 5% GST without input tax credit. Hotel restaurants attached to rooms priced above Rs 7,500 charge 18%. That's the short version. Here is the detailed breakdown of exactly which slab applies when, and how billing software like Digital Eatery handles the math so your staff doesn't have to.
What is the GST rate on restaurant food in India
Most standalone restaurants and cafes charge 5% GST on food bills. You can't claim input tax credit on this. The rate applies to dine-in, takeaway, and delivery orders from regular eateries. Hotel restaurants linked to rooms above Rs 7,500 per night charge 18% instead.
That 5% slab covers most restaurants in India. Small cafes, quick service outlets, family restaurants, and food trucks all fall here. The government fixed this rate to keep food affordable while pulling restaurants into the formal tax net. You don't get to choose a different rate for a standalone outlet. If your restaurant isn't attached to a hotel room priced above the threshold, 5% is what you charge.
People often get confused about alcohol. Alcohol itself falls outside GST and is taxed separately under state excise rules. But the food and non-alcoholic items on the same bill still follow the 5% restaurant rate. For a deeper look at how this plays out on actual food items, check our detailed breakdown of gst on restaurant food.
GST rate for hotel restaurants: when 18% applies
Hotel restaurants charge 18% GST only when the hotel's room tariff exceeds Rs 7,500 per night. This rule is tied to the accommodation pricing, not the food itself. If room rates stay below that threshold, the attached restaurant follows the standard 5% rate.
This trips up a lot of hotel owners who run both lodging and dining under one roof. The food menu doesn't decide the tax rate here. The room pricing does. A five-star property with rooms above Rs 7,500 will bill its in-house restaurant at 18%, even for a simple breakfast order. A budget hotel with rooms under that mark keeps its restaurant billing at 5%, same as any standalone cafe.
This guide focuses on food billing inside restaurants and cafes. Lodging room GST itself is a separate topic with its own slabs and rules, and falls outside what we're covering here.
Does the cafe GST rate differ from restaurants
Cafe GST rates follow the same 5% slab as standalone restaurants. There is no separate category for cafes under GST law. Coffee shops, bakeries with seating, and quick bite cafes all fall under the restaurant services classification.
Owners sometimes assume cafes get a different rate because they serve lighter fare or operate with smaller footprints. That isn't how the GST structure works. The classification depends on the nature of service, offering prepared food and beverages for consumption, not the size or style of the outlet. A cafe billing a customer for a sandwich and coffee applies 5%, the same way a full-service restaurant would for a thali.
Bakeries selling packaged goods over the counter without dine-in service may fall under different GST treatment depending on the product. But any cafe offering table service or in-house consumption sits in the 5% restaurant bracket.
How GST shows up on the final bill
GST on a restaurant bill appears as a line item calculated on the total food value. At 5%, a Rs 1,000 order adds Rs 50 in tax, bringing the total to Rs 1,050. The rate is fixed per bill based on the outlet type.
Customers often ask why their bill shows one combined 5% line instead of a split between CGST and SGST. Most restaurant bills show the breakdown as 2.5% CGST and 2.5% SGST, which together make up the 5% total. This split exists because GST in India divides collections between central and state governments. The customer pays the same combined amount either way.
A wrong GST line on a printed bill can lead to customer complaints or awkward corrections at the counter. For more detail on how this appears on a formal bill, see our piece on gst on restaurant bill formatting and structure.
GST rate table: restaurants, cafes and hotels
Here is a quick reference table covering the common scenarios restaurant and cafe owners run into.
| Establishment Type | GST Rate | Input Tax Credit |
|---|---|---|
| Standalone restaurant | 5% | Not available |
| Cafe or coffee shop | 5% | Not available |
| Food truck or quick service outlet | 5% | Not available |
| Hotel restaurant (room tariff below Rs 7,500) | 5% | Not available |
| Hotel restaurant (room tariff above Rs 7,500) | 18% | Available |
| Outdoor catering services | 18% | Available |
This covers the scenarios most small and medium restaurant owners deal with day to day. If your business operates purely as a restaurant or cafe without hotel rooms attached, 5% is almost always your number.
Setting up GST correctly in your billing system
Setting up GST correctly starts with assigning the right tax rate to each dish in your menu, not at the outlet level. This keeps every bill accurate automatically, whether the order is dine-in, takeaway or delivery.
Digital Eatery applies GST per dish. The rate is tied to the item itself when you build your menu. There is no per-outlet GST claim or manual override needed at billing time. Once the rate is set on a dish, every bill pulls that rate automatically without the cashier doing extra math.
This sounds minor until you're running a busy shift. Restaurants often add new items mid-season, run combo offers, or adjust menus for festivals. If GST is set once per dish during menu setup, these changes don't break your tax accuracy later. You can manage this directly from menu management and keep every item's tax rate consistent across your outlets.
For owners running multiple locations, this per-dish setup also avoids confusion when outlets have different menu items. Each outlet's bills reflect correct tax rates for the items actually sold there. You can see how this fits into broader outlet management through our multi-outlet feature.
Billing, connectivity and the bill of supply
A bill of supply is issued instead of a tax invoice when the outlet cannot charge GST, for example under the composition scheme, so it shows item values and the total with no GST line. It is not the same as a tax invoice.
For most restaurant and cafe transactions, a simple GST-inclusive bill works fine for the customer. Digital Eatery's restaurant billing feature generates this cleanly, with GST worked out automatically from each dish's tax rate once it's set. New bills save offline and sync later, so billing continues even during a spotty internet connection.
Keep in mind that KOT and kitchen display features do need internet to function, since they relay live order data to the kitchen. Billing itself keeps working regardless. This separation matters for restaurants in areas with inconsistent connectivity, where the cashier still needs to close out a table even if the network briefly drops. If you want to understand how a formal bill of supply differs from a regular bill, our GST billing feature page covers that distinction in detail.
Using a GST calculator for restaurant bills
A GST calculator helps verify the tax amount on any bill quickly, without manual multiplication errors. Enter the bill value and rate, and it returns the tax split and final total instantly.
While Digital Eatery's billing system calculates this automatically per dish, having a quick manual calculator on hand is useful for spot checks or explaining a bill to a customer. It also helps new staff understand how the 5% or 18% rate breaks down into CGST and SGST components. For a simple tool to cross check your numbers, our sales reports dashboard also shows tax collected across periods, which doubles as a good sanity check.
Frequently asked questions
What is the standard GST rate for restaurants in India? Most standalone restaurants and cafes charge 5% GST on food bills, without input tax credit. This applies to dine-in, takeaway and delivery.
Does the GST rate change for hotel restaurants? Yes. Hotel restaurants charge 18% GST only when the attached hotel's room tariff exceeds Rs 7,500 per night. Otherwise, they follow the 5% rate.
Is the cafe GST rate different from the restaurant GST rate? No. Cafes follow the same 5% GST rate as standalone restaurants. There is no separate GST category for cafes.
Can a restaurant choose its own GST rate? No. The rate is fixed by the type of establishment and, for hotel restaurants, the room tariff. There is no option to select a different rate.
Does billing software calculate GST automatically? Yes. Digital Eatery applies GST per dish during menu setup, so every bill calculates tax automatically without manual entry at the counter.
Getting your restaurant GST rate right means you aren't overcharging customers and your bills stay audit ready. Digital Eatery handles this by tying GST to each dish, so whether you're ringing up a dine-in order or a delivery, the math is already done.
New bills save offline and sync later, so your counter keeps moving even if the internet drops though your KOT and kitchen display will need a connection to push orders to the back of house. You settle payments manually, keeping things simple for small and medium restaurants. Priced at Rs 10,000 one-time in India or $119 globally, it is built for owners who want billing that just works. Explore pricing or check the lifetime deal to get started.
Published with LeafPad