Most restaurant GST confusion is not about the rate. It is about which rate applies to your premises, what your bill has to print, and when the e-invoice rules start applying to you. Here is the current position, sourced, and what it means for the billing software you choose.
Ask three restaurant owners in India what GST rate they charge and you will often get three answers, all delivered with confidence. The rate itself is not the hard part — the hard part is knowing which rule your premises fall under, what your bill is legally required to print, and at what turnover the e-invoicing machinery switches on. Get those three right and your billing software is a solved problem. Get them wrong and the error is printed on every bill you issue, hundreds of times a day, until someone notices.
This guide sets out the current position with the primary sources linked, then translates it into what to actually check in a billing system. It is written for operators, not accountants, and it is not tax advice — GST rates and thresholds change, sometimes with a few weeks of notice, so confirm anything below with your CA or the CBIC portal before you rely on it.
For the overwhelming majority of restaurants in India, restaurant service is taxed at 5% GST with no input tax credit. That covers dine-in, takeaway, air-conditioned and non-air-conditioned rooms, and cloud kitchens alike. The "no ITC" half matters more than operators expect: you cannot offset the GST you paid on rent, equipment, packaging or ingredients against the GST you collect. Your input GST is a cost, not a credit.
The exception is restaurant service supplied at what the rules call specified premises. Since 1 April 2025 that means premises providing hotel accommodation where the value of supply of any unit of accommodation exceeded ₹7,500 per unit per day in the preceding financial year. A restaurant inside such a hotel charges 18% GST and can claim input tax credit. A supplier may also opt in to specified-premises treatment by declaration.
| Situation | Rate | Input tax credit |
|---|---|---|
| Standalone restaurant — dine-in, takeaway, cloud kitchen | 5% | Not available |
| Restaurant inside a hotel where no unit exceeded ₹7,500/day last FY | 5% | Not available |
| Restaurant at "specified premises" (a unit exceeded ₹7,500/day last FY, or opted in) | 18% | Available |
One practical consequence: if you run a restaurant inside a hotel, your rate can change at a financial-year boundary because of what the rooms did, not because of anything the restaurant did. That is a calendar reminder, not a software feature, and it is worth setting one.
Restaurants with an annual turnover up to ₹1.5 crore — ₹75 lakh in the special category states — may opt for the composition scheme. The headline is administrative rather than financial: instead of monthly GSTR-1 and GSTR-3B filings, you make one quarterly payment via CMP-08 and file one annual return, GSTR-4.
If you have corporate customers who expect to claim credit on catering, the composition scheme quietly costs you those accounts. That is a sales decision as much as a tax one.
This is where billing software earns its place, because the requirements are unglamorous and unforgiving. A tax invoice needs your legal name and address, your GSTIN, an invoice number that is unique and sequential within the financial year, the date, a description of what was supplied with the applicable HSN or SAC code, the taxable value, and the tax split out — CGST and SGST for a supply within your state, IGST for an inter-state supply. Restaurant service is generally supplied where it is consumed, so most restaurants are in CGST/SGST territory all day.
The sequential-numbering requirement is the one that catches people. A series that restarts when a terminal is replaced, or that runs in parallel on two devices without a device prefix, produces duplicates — and duplicates are the sort of thing that turns a routine scrutiny into a long afternoon. Any billing system you consider should be able to show you, plainly, how it guarantees a single unbroken series across every terminal in the outlet.
E-invoicing is mandatory for businesses whose aggregate annual turnover has exceeded ₹5 crore in any financial year from 2017-18 onwards. That threshold has been in place since 1 August 2023. It is worth reading that definition twice, because it is not "your turnover this year" — crossing ₹5 crore once puts you in scope, and you stay in scope.
Practically, e-invoicing means your invoice is reported to the Invoice Registration Portal, which returns an IRN and a signed QR code that must appear on the document you hand the customer. The upside is that reported invoices auto-populate into GSTR-1, which removes a large amount of manual re-entry. The requirement to check in software is not "does it do e-invoicing" but "does it do e-invoicing at the speed of a dinner rush, and what does it do when the IRP is unreachable" — because a portal that is briefly down must not become a queue of guests who cannot pay.
For most urban Indian restaurants, orders arriving through Swiggy and Zomato are a large share of volume, and the GST treatment of those orders is not the same as your counter sales. Since January 2022, e-commerce operators are liable to pay GST on restaurant service supplied through their platforms. In plain terms, the aggregator handles the GST on those orders rather than you collecting it. Your own reporting still has to reflect the supply correctly, which means your billing system needs to keep aggregator channels distinct from direct sales rather than tipping everything into one bucket.
This is the single most common reason a restaurant's books do not reconcile with its GST return in India: the channel split was never modelled, so a month of aggregator volume is either double-counted or missing. Whatever you buy should let you see direct and aggregator revenue separately without exporting to a spreadsheet first.
Novaryq runs on integrated tax configuration with per-channel reporting, so direct and marketplace orders stay separate in the numbers you review. Pricing and what is included are on the pricing page; the FAQ covers how the India setup differs from our North American one.
Positions stated above were checked against these sources on 6 September 2026. GST rates, thresholds and procedures change; confirm the current rule before acting on anything here.
Restaurant service at a standalone outlet is taxed at 5% GST without input tax credit, covering dine-in, takeaway and cloud kitchens alike. The 18%-with-ITC rate applies to restaurant service at "specified premises" — broadly, hotels where a unit of accommodation exceeded ₹7,500 per day in the preceding financial year, or suppliers who have opted in. Confirm the current position with your CA, as rates change.
E-invoicing applies to businesses whose aggregate annual turnover has exceeded ₹5 crore in any financial year from 2017-18 onwards; that threshold has applied since 1 August 2023. Note the test is historical, not current-year — crossing the threshold once brings you into scope.
No. Composition-scheme restaurants pay a flat rate on turnover and cannot claim input tax credit, and they issue a bill of supply rather than a tax invoice — so business customers cannot claim credit either. The scheme also excludes businesses serving alcohol.
Since January 2022, e-commerce operators are liable to pay GST on restaurant service supplied through their platforms, so the aggregator handles GST on those orders rather than the restaurant collecting it. Your own reporting still needs to represent the supply correctly, which is why keeping aggregator and direct channels separate in your billing system matters.
Invoice numbers must be unique and sequential within the financial year. Systems that number per device, or that restart a series when hardware is replaced, can produce duplicates. Ask any vendor to explain specifically how a single unbroken series is maintained across every terminal in the outlet.