Restaurant GST Masterclass: Navigating 5% GST without ITC vs. 18% AC/Composite Rules

The Peculiarities of Restaurant GST in India

Unlike standard businesses that claim full Input Tax Credit (ITC) on inward supplies, standalone restaurants in India operate under a mandatory 5% GST rate (2.5% CGST + 2.5% SGST) without any Input Tax Credit benefits. Misunderstanding tax rates or misapplying service charges leads to severe consumer forum penalties.

Key Scenarios in Restaurant Taxation

• Standalone Dining Outlets: 5% GST without ITC.
• Restaurants Located in Hotels (Room Tariff > ₹7,500/day): 18% GST with full ITC.
• Section 9(5) Food Delivery via E-Commerce: Swiggy/Zomato collect and deposit GST on behalf of restaurants.

Relaso Restaurant POS handles automated GST calculation, compliant tax invoice printing, and seamless GSTR-1 summary generation.