Running a restaurant or café involves more than preparing food and serving customers. Owners also need to understand when GST registration becomes necessary, which tax rate applies and whether input tax credit is available.
Most standalone restaurants and cafés supplying restaurant services attract 5% GST without input tax credit. Restaurant services supplied at “specified premises”, generally qualifying hotel premises, attract 18% GST with eligible input tax credit. Businesses cannot freely choose between these rates.
This blog explains GST registration for restaurants and cafés, the difference between 5% and 18%, and the practical checks that help owners manage billing correctly.
Quick Summary
GST registration for restaurants and cafes in India depends on the nature of services provided, applicable GST classification and business operations. Restaurant services are generally subject to 5% GST without input tax credit, while certain specified restaurant services, including those supplied by restaurants located in specified hotel premises, may attract 18% GST with input tax credit, subject to applicable conditions. Understanding the correct GST rate helps food businesses manage billing, tax collection and compliance.
- Understand the 5% GST rate: Restaurant services generally attract 5% GST without the benefit of input tax credit, subject to applicable provisions.
- Check the 18% GST category: Certain specified restaurant services, including those supplied at specified hotel premises, may attract 18% GST with input tax credit.
- Determine registration eligibility: Check your aggregate annual turnover, applicable threshold limits and compulsory registration provisions under GST law.
- Prepare registration documents: Keep PAN, Aadhaar, business address proof, bank details and other applicable documents ready.
- Configure GST billing correctly: Apply the appropriate GST rate to restaurant bills, takeaway orders and other taxable supplies based on their classification.
- Understand input tax credit: Review whether your restaurant category permits ITC and ensure that your accounting practices follow the applicable restrictions.
- Maintain regular compliance: Complete applicable GST returns, tax payments, invoice requirements and record-keeping within the prescribed timelines.
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When Is GST Registration Required for Restaurants and Cafes?
A restaurant or café generally needs GST registration when its aggregate turnover in a financial year exceeds the applicable service threshold.
| Business location | General annual registration threshold |
| Most states and Union territories, including Delhi | Rs. 20 lakh |
| Manipur, Mizoram, Nagaland and Tripura | Rs. 10 lakh |
Restaurant service is treated as a service. Consequently, owners should not automatically apply the Rs. 40 lakh registration threshold available to certain businesses exclusively supplying goods.
Registration requirements can also arise under compulsory registration provisions, depending on the business arrangements. Turnover should therefore be the starting point, followed by a check for any independently applicable requirement. Apply within 30 days of becoming liable. Without registration, a restaurant cannot lawfully charge GST on its bills, and a restaurant that collects GST while unregistered is committing an offence.
Voluntary registration is possible below the threshold. However, owners should understand the resulting invoicing, payment and return obligations before applying.
How Is Aggregate Turnover Calculated?
Aggregate turnover is generally calculated across India for businesses operating under the same PAN. It includes taxable supplies, exempt supplies, exports and interstate supplies, while excluding GST itself.
For example, two cafés under the same PAN generating Rs. 12 lakh each have combined turnover of Rs. 24 lakh. Assessing them separately could lead to a missed registration obligation.
Different trading names do not automatically create separate turnover thresholds. Review the legal ownership and PAN behind each outlet.
Check your combined turnover and operating locations before deciding whether GST registration is required.
GST on Restaurants: 5% vs 18%
The principal distinction concerns restaurant services supplied at ordinary premises compared with those supplied at specified premises.
| Type of restaurant service | GST rate | Input tax credit |
| Standalone restaurant or café | Generally, 5% | Not available for purchases used in those services |
| Restaurant at hotel premises that do not qualify as specified premises | Generally, 5% | Not available for those services |
| Restaurant service supplied at specified premises | 18% | Available subject to normal eligibility conditions |
For ordinary intrastate supplies, 5% comprises 2.5% CGST and 2.5% SGST. At 18%, the corresponding split is 9% CGST and 9% SGST.
Premium interiors, expensive meals or an air-conditioned dining area do not independently place a standalone restaurant in the 18% category. The September 2025 GST rate changes affected hotel room rates, and they did not change the restaurant rates above.
What Are Specified Premises Under GST?
Specified premises are determined through the hotel accommodation criteria and applicable declaration rules.
From 1 April 2025, the definition includes premises where the supplier provided hotel accommodation during the preceding financial year with the value of supply of any accommodation unit above Rs. 7,500 per unit per day or equivalent.
Qualifying declarations under the prescribed procedure can also bring premises within this category.
The practical points are:
- Actual accommodation value matters: The automatic test considers the value of accommodation supplied, rather than merely the advertised tariff.
- The preceding year matters: The previous financial year’s accommodation supplies determine the automatic classification.
- Declarations matter: Eligible hotel accommodation suppliers may use the prescribed declaration procedure.
- The test is premises-specific: Businesses should assess each relevant property.
For example, a hotel that supplied an accommodation unit for Rs. 8,000 per day during FY 2025–26 would meet the preceding-year value test for FY 2026–27.
Eligible existing registered hotel accommodation suppliers generally file an opt-in declaration (Annexure VII) between 1 January and 31 March of the preceding financial year. A person applying for a new registration files its declaration (Annexure VIII) within 15 days of the registration acknowledgement. The opt-in continues until an opt-out declaration (Annexure IX) is filed in the same January to March window.
A standalone restaurant cannot use this mechanism simply to select 18% with input tax credit.
What Does “Without Input Tax Credit” Mean?
Input tax credit or ITC, allows eligible GST paid on business purchases to be adjusted against output GST liability.
The 5% restaurant-service rate carries a condition that credit of input tax charged on goods and services used in supplying those services has not been taken.
Consequently, GST on relevant ingredients, equipment, rent and business services may become a cost. Businesses carrying out multiple activities must also examine credit allocation and reversal requirements.
For instance, a café should consider the full cost of equipment when preparing its budget if the related GST cannot be claimed as credit.
At 18%, ITC remains subject to normal eligibility conditions and restrictions. A higher output rate does not make every purchase eligible.
Can a Cafe Choose 18% to Claim ITC?
No. A standalone café cannot choose 18% merely because its rent, renovation or equipment purchases carry GST.
The applicable service entry and premises classification determine the treatment. Business expenses do not create a general option to switch rates.
Before planning around expected tax credits, establish whether the business legally qualifies for the relevant treatment.
How Is GST Calculated on Restaurant Bills?
Assume the taxable value of restaurant services is Rs. 1,000 before GST:
| Particulars | At 5% GST | At 18% GST |
| Taxable value | Rs. 1,000 | Rs. 1,000 |
| CGST | Rs. 25 | Rs. 90 |
| SGST | Rs. 25 | Rs. 90 |
| Total GST | Rs. 50 | Rs. 180 |
| Total bill | Rs. 1,050 | Rs. 1,180 |
These examples explain the calculation, rather than offering a choice of rates.
Configure the billing system after confirming the applicable classification. Staff should also understand the setup so that manual changes do not produce inconsistent invoices.
Where prices are advertised as tax-inclusive, calculate the tax component within the stated price instead of automatically adding GST again. If a service charge is added to the bill, GST applies to it at the same rate as the food.
Since 1 October 2021, an FSSAI order also requires every food business to print its 14-digit FSSAI licence or registration number on its bills and invoices, not only on the wall. See FSSAI registration vs licence.
Composition Scheme for Small Restaurants
A small restaurant can choose the composition scheme as an alternative to regular registration:
- Rate: a flat 5% of turnover (2.5% CGST and 2.5% SGST).
- Limit: turnover up to Rs. 1.5 crore (Rs. 75 lakh in some special category states).
- Not allowed: serving alcohol, making inter-state supplies, and claiming ITC.
- Billing: a bill of supply, not a tax invoice, and no GST can be collected from customers separately. A notice board shows the status.
- Returns: CMP-08 quarterly by the 18th of the month after the quarter, and GSTR-4 annually.
- Opting in: through Form CMP-02 before the start of the financial year, or at registration.
- Delivery platforms: a composition restaurant is generally not allowed to supply through platforms, so check the current rules before joining one.
Composition suits a small, walk-in business that does not need to pass on credit. A restaurant that sells to GST-registered businesses, plans to expand across states, or wants to join delivery platforms should compare it with the regular scheme first.
How Does GST Apply to Online Food Orders?
For restaurant services covered by Section 9(5), the e-commerce operator pays GST on supplies made through its platform.
This mechanism has applied since 1 January 2022 and includes covered supplies made by unregistered restaurants. However, platform sales still count towards the restaurant’s aggregate turnover.
Owners should therefore:
- Include covered platform sales when assessing registration liability.
- Identify direct sales and platform sales separately.
- Avoid paying output tax twice on the same covered supply.
- Reconcile order values, cancellations, refunds and settlement statements.
- Report the covered platform sales in the GSTR-3B table meant for supplies on which the operator pays tax.
Restaurant services supplied at specified premises fall outside this particular platform-payment category.
Also, the platform’s payment of GST on covered restaurant orders does not settle every tax issue associated with its services. Review commission invoices and other charges separately. The commission and other platform fees carry 18% GST.
Documents Required for Restaurant GST Registration
The documents depend on the entity type, authorised signatory and premises arrangement.
| Document category | Common examples |
| PAN details | Proprietor’s PAN or the entity’s PAN |
| Business constitution | Partnership deed or incorporation certificate, as applicable |
| Relevant persons | Photographs and identification details |
| Signatory authorisation | Authorisation letter or board resolution, where applicable |
| Business premises | Ownership documents, rent agreement or consent documentation |
| Address support | Relevant utility or property documents |
The portal’s document requirements should be followed for the particular application. Ensure the legal name, PAN details and premises address are consistent across the application and supporting records. A company or LLP signs the application with a DSC.
GST registration also serves a different purpose from food safety licensing. Owners should separately assess the registrations and permissions required for their operations, including an FSSAI State licence where the turnover requires it.
How to Apply for GST Registration
- Assess Registration Liability: Review turnover, ownership, operating states and any compulsory registration trigger. Identify whether the application is mandatory or voluntary.
- Start the Online Application: Visit the GST Portal and begin a new registration application. Enter the required PAN, contact and state details.
- Complete Form GST REG-01: Provide business, promoter, authorised signatory, premises and supply details. Record the principal and additional places of business correctly.
- Upload Supporting Documents: Select documents appropriate to the entity and occupancy arrangement. Check that uploaded copies are clear and complete.
- Complete Verification: Follow the applicable authentication and verification requirements, including Aadhaar authentication. Track the application and respond to clarification notices within the prescribed period. Approval usually takes 3 to 7 working days.
- Review the Registration Certificate: Once registration is granted, check the particulars and configure billing and compliance records accordingly.
Professional assistance can help align your registration application, premises classification and billing setup.
What Should Restaurant Owners Check After Registration?
Registration is followed by continuing compliance. Establish a routine for:
- Recording daily sales and purchase invoices.
- Separating direct orders from covered platform orders.
- Applying the correct tax treatment.
- Reconciling settlements and bank receipts.
- Filing applicable GST returns and paying tax. Regular taxpayers file GSTR-1 and GSTR-3B.
- Reviewing changes in outlets, ownership or operations.
- Displaying the GSTIN and the certificate at the premises.
Assign responsibility for these tasks, and put the dates on the compliance calendar for FY 2026-27. Clear records make discrepancies easier to investigate and help prevent small billing errors from continuing across several return periods.
Many owners also register on Udyam for access to MSME benefits; see Udyam registration. It is separate from GST.
Common GST Mistakes to Avoid
Common mistakes include applying the goods-only threshold, checking turnover outlet by outlet, excluding platform sales and claiming ITC on purchases used for 5% restaurant services.
Other mistakes are:
- Printing GST on a bill before registration, or charging GST under composition.
- Leaving the FSSAI number off the bill.
- Assuming a hotel restaurant is at 18% without checking the preceding-year room rate or the declaration.
- Ignoring GST notices; see how to reply to a GST notice.
Another mistake is assuming every item sold from a café receives identical treatment. Separately supplied retail goods, catering arrangements and other activities may require their own classification.
Review what is actually supplied before applying one blanket rate throughout the billing system.
Conclusion
GST registration for restaurants and cafés requires separate checks of registration liability, service classification and premises status. Establishing these correctly helps owners price their offerings, maintain reliable records and apply the appropriate tax treatment.
Regularly reviewing turnover, invoices and delivery platform transactions can help identify discrepancies early. Clear internal processes also support consistent billing and better financial planning as your restaurant or café grows.
Review your GST position before opening another outlet or changing your business operations.
Need Help with GST Registration for Your Restaurant or Cafe?
Get professional assistance with GST registration, applicable tax rate assessment, input tax credit eligibility, GST invoicing and return filing to help your restaurant or cafe meet its GST compliance requirements in India.
Frequently Asked Questions
1. Is GST registration compulsory for a small café?
Generally, registration becomes necessary when aggregate turnover exceeds the applicable service threshold. Compulsory registration provisions may apply earlier, depending on the circumstances.
2. Does an expensive restaurant bill attract 18% GST?
No. The bill amount does not independently determine the rate. The applicable restaurant-service entry and premises classification matter.
3. Can a registered restaurant automatically claim ITC?
No. Registration alone does not establish eligibility. The 5% restaurant-service rate carries a no-ITC condition for purchases used in those services.
4. Do online delivery sales count towards registration turnover?
Yes. Covered platform sales remain part of aggregate turnover even when the e-commerce operator pays GST under Section 9(5).
5. Does every outlet need a separate GST registration?
Not necessarily. Registration is generally state-specific. Outlets within the same state may operate under one registration with additional places declared; see multiple GST registration in the same state. Operations across states need a separate registration in each; see GST registration in different states.
6. Can a small restaurant pay a flat 5% under composition?
Yes, up to Rs. 1.5 crore of turnover, with no ITC, no alcohol and no inter-state supply.
7. Is takeaway or home delivery by the restaurant taxed differently?
No. A restaurant’s own takeaway and delivery are part of restaurant service at 5%, without ITC.
8. Is alcohol covered by GST?
No. Alcoholic liquor for human consumption is outside GST, and a restaurant serving it cannot use the composition scheme.
9. Do I have to print the FSSAI number on bills?
Yes. An FSSAI order requires food businesses to print the 14-digit number on bills and invoices.
10. Does a hotel restaurant always charge 18%?
No. It does so only if the premises are specified premises, meaning room rates above Rs. 7,500 in the preceding year or an opt-in declaration.
11. How long does restaurant GST registration take?
Usually 3 to 7 working days after the application is submitted with correct documents.
