Understanding GST on restaurant bills: What diners and food businesses should know

Whether you are dining in, ordering takeout, or getting food delivered, it's important to understand how the goods and services tax (GST) is applied on restaurant bills. For restaurant owners and consumers alike, GST directly impacts pricing, billing, and even operational decisions.

What is GST on restaurants?

The government levies GST on restaurants based on their type and structure. Currently, there are three common slabs applicable:

5%: For restaurants that do not claim input tax credit (ITC), which includes most standalone restaurants, regardless of whether it’s dine-in, takeaway, or delivery.

12%: For restaurants in hotels with room tariffs above ₹7,500 that opt to claim ITC.

18%: For outdoor catering services with ITC benefit.

GST replaced the earlier tax regime involving service tax and VAT, offering a consolidated system.

What the law says vs what happens in practice

In theory, GST rates apply uniformly across dine-in, takeaway, and delivery. But in practice, the mode of service can determine how GST is collected and by whom — especially in the case of food aggregators.


“We follow the applicable GST structure — 5% for dine-in, takeaway, and delivery orders without input tax credit. We maintain complete transparency in billing, which helps build customer trust across all formats,” said Paras Teotia, Co-Founder of Curry Crown, a restaurant chain operating under the standard 5% slab.

Restaurants registered under the composition scheme, which is available to those with turnover up to ₹1.5 crore annually, pay a lower fixed tax of 5% but cannot charge GST on the bill or claim ITC.

Impact on pricing and strategy

For most restaurants, GST is more than just a statutory obligation. It directly affects how menus are priced and how much customers ultimately pay.

“While GST does play a role in our pricing strategy, we consciously keep our menu fair and accessible, absorbing some of the tax impact internally to ensure value for our guests,” added Teotia.

Others highlight the operational hurdles that come with tax exclusions.

For example, not being able to claim ITC means restaurants bear the full burden of GST on inputs like ingredients, rent, and utilities.

“Reintroducing input tax credit could empower restaurants to invest more in premium ingredients, infrastructure, and better services,” Teotia said.

Aggregators and online orders

For food ordered through platforms like Zomato or Swiggy, GST collection responsibility shifts.

“In the case of aggregator platforms, GST is collected and handled directly by the platform. The customer still sees the GST breakdown, but it’s the platform that deposits the tax with the government,” explained Yogesh Sharma, Founder & CEO of Karigari, a premium dining brand.

Transparency is key

Restaurants are focusing on clear and compliant billing practices. Karigari, for instance, highlights transparent GST practices as a part of its customer experience model.

“We believe that a good dining experience includes not just exceptional food, but also honest, clear communication. Our billing practices reflect both compliance and our commitment to building trust,” Sharma said.

He noted that GST affects everything — from how dishes are priced to how customers perceive value.

"Customers are aware of final billing amounts. Transparent and inclusive pricing helps maintain trust and avoids surprises at billing time," Sharma added.