GST Restaurants
5% Standalone · 18% Specified Premises

RESTAURANT GST RATES (rates themselves unchanged by GST 2.0, but the eligibility rule tightened on 22 September 2025): (1) STANDALONE RESTAURANT: 5% NO ITC — and from 22 September 2025 that is the ONLY option. (2) AIR CONDITIONING AND A LIQUOR LICENCE MAKE NO DIFFERENCE. The AC/non-AC split was scrapped back in 2017; the test today is whether you are in 'specified premises'. (3) RESTAURANT IN SPECIFIED PREMISES: 18% with ITC. 'Specified premises' means a hotel where any unit of accommodation was supplied above ₹7,500 per unit per day in the preceding financial year, or premises for which the supplier has filed an opt-in declaration. (4) RESTAURANT IN A HOTEL BELOW THAT LINE: 5% no ITC. (5) HOME DELIVERY: same as parent restaurant rate. (6) OUTDOOR CATERING outside specified premises: 5% no ITC.

WHAT CHANGED ON 22 SEPTEMBER 2025: the 56th GST Council added Explanations to the definition of 'specified premises' making clear that a stand-alone restaurant CANNOT declare itself specified premises, and therefore cannot choose to pay 18% with ITC. If you were an ITC-hungry standalone that had opted in, that route is closed.

Source: GST Council 56th meeting press release, Other changes relating to services, item (i).

COMPOSITION SCHEME FOR RESTAURANTS: (1) TURNOVER ≤ ₹1.5 CRORE: eligible for composition scheme. (2) RATE: 5% of turnover (no separate GST split). (3) NO ITC. (4) Quarterly return CMP-08 + annual GSTR-4. (5) NO INTER-STATE supplies allowed. ADVANTAGES: (1) Simpler compliance. (2) Comparable headline rate to the 5% no-ITC regular route, with less paperwork. (3) Less paperwork.

DISADVANTAGES: (1) No ITC. (2) Inter-state restrictions. SMALL RESTAURANTS BENEFIT — large multi-state chains don't qualify.

CLOUD KITCHENS: (1) Operate from commissary — no dine-in. (2) Same GST treatment as restaurants. (3) STANDALONE: 5% no ITC. (4) AC + branded: 5% (no liquor typically). (5) ZOMATO/SWIGGY collect TCS Section 52: 1% on aggregator commission. (6) RESTAURANT pays GST on food sale value. (7) AGGREGATOR PLATFORM (Zomato/Swiggy): 18% GST on commission/delivery fee from restaurant. (8) CONSUMER pays GST INCLUDED in final bill. CRITICAL: maintain records of aggregator commissions for ITC/expense claims.

BANQUET HALL + EVENT GST: (1) BANQUET HALL HIRE: 18% with ITC. (2) INDOOR CATERING in banquets: 18%. (3) OUTDOOR CATERING: 5% no ITC. (4) COMPLEX EVENTS (decoration + venue + catering bundled): GST on package value at 18%. (5) WEDDING CATERING: bundled package usually 18%. STRATEGIC: Many small caterers use composition scheme (5% turnover ≤ ₹1.5cr) avoiding 18%.

Large catering companies + premium hotels: 18% standard with ITC.

RESTAURANT CHAIN STRATEGY: (1) MULTI-STATE: 18% with ITC is only available inside specified premises (hotel-attached). A standalone chain, however large, is 5% without ITC — so rent, utilities and ingredient GST are absorbed cost, and menu pricing has to carry them. (2) SINGLE-STATE SMALL: 5% no ITC simpler. (3) LIQUOR LICENCE: does NOT change your restaurant-service rate (alcohol itself is outside GST and carries state excise/VAT). (4) AC AMBIENCE upgrade: does NOT move you to 18% — that myth dates from the pre-2017 rules.

Only being in specified premises does, and from 22 September 2025 a standalone restaurant cannot elect into it at all. (5) DELIVERY-FOCUSED: cloud kitchen with 5% rate. (6) FRANCHISE: separate GST registrations per state. (7) AGGREGATOR DEPENDENCY: factor in Zomato/Swiggy commission + 18% GST on commission. (8) GSTR-3B monthly + GSTR-1 monthly. (9) Cash management critical — restaurants are cash-heavy.