The short version
Most standalone restaurants in India charge 5% GST on food and cannot claim input tax credit (ITC) on what they buy. Restaurants inside hotels that count as "specified premises" charge 18% and can claim ITC. This single difference changes how purchases, rent and services should be costed.
Standalone restaurants at 5%
When you charge 5% without ITC, the GST you pay to vendors is not recoverable. That includes GST on ingredients where applicable, packaging, rent, repairs, software and professional services.
In practice, this means the GST on a purchase is part of its cost. If your costing uses pre-tax prices, food cost and overheads will look better than they really are.
Specified premises at 18%
Restaurant services supplied from specified premises are taxed at 18% with ITC available. Broadly, specified premises are hotels where the tariff of a room crosses ₹7,500 a day. From April 2025, this is judged on the previous financial year, and hotels can also choose to be treated as specified premises by declaration.
Here, GST on eligible purchases is claimed as credit, so costing uses pre-tax values and ITC must be tracked and reconciled with your vendors' filings.
Aggregator orders and liquor
- Swiggy, Zomato and other e-commerce operators: for restaurant services supplied through them, the operator pays GST under Section 9(5). You don't charge output GST on those orders.
- Liquor: alcoholic liquor for human consumption is outside GST and taxed under state VAT. Bars keep food and liquor on separate tax treatment, often in the same bill.
Setting up your books
Configure tax treatment per GSTIN, because a group can have both standalone restaurants and hotel outlets. Make sure purchase entries record vendor GST correctly even when it isn't claimable, since you'll still need the records. Keep aggregator sales on separate income accounts, and keep liquor separate from GST-taxed sales.
DeepRestaurantAI sets up tax treatment per GSTIN, adds non-claimable GST to cost where it applies, books aggregator sales without output GST and prepares GSTR-1 from the books.