GST Rate on Restaurant Food: 5% or 18%?
GSTZone Desk · Updated 2026
Short answer
A standalone restaurant charges 5% GST with no input tax credit. A restaurant located inside a hotel classified as ‘specified premises’ charges 18% GST, but gets to claim ITC.
In detail
This has nothing to do with air conditioning — that AC-versus-non-AC split was a pre-GST era rule that people still confuse restaurant bills with. Under GST, the dividing line is where the restaurant sits, not whether it has an AC unit running.
A standalone restaurant, a food court counter, or a dhaba — none of them linked to a high-tariff hotel — is taxed at a flat 5%, and cannot claim credit for the GST paid on its own purchases (rent, raw material, gas). That no-credit condition is deliberate; it’s what keeps the rate low.
A restaurant operating inside a hotel that qualifies as ‘specified premises’ — broadly, a hotel where any room’s tariff crossed ₹7,500 a day in the reference year — moves to 18%, but in exchange gets full input tax credit on its costs. That’s why a five-star hotel’s restaurant bill and a neighbourhood dhaba’s bill can show two completely different GST rates for what looks like the same plate of food.
GSTZone tip
If you run a restaurant and your bills seem to be charging the wrong rate, the first thing to check isn’t the menu — it’s whether your premises (or the hotel you sit inside) crossed the ₹7,500 room-tariff line in the relevant year. That single fact decides your rate.
Related questions
Can a 5% restaurant choose to charge 18% instead to get ITC?+
No — for standalone restaurants, 5% without ITC is not optional; it’s the mandatory rate for that category, not a choice you elect into.
Does home delivery or a cloud kitchen follow the same rule?+
Yes, the same principal-supply logic applies — a standalone cloud kitchen with no linked high-tariff hotel is taxed the same way as a standalone dine-in restaurant.
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