GST & Tax
GST Rates for Restaurants in India, 5% vs 18% Explained
28 May 2026 · Piatto Pro Team
“Why did that restaurant charge me 18% when mine charges 5%?” It’s the most common GST question in the food business, and the answer is more logical than it looks once you see what decides the rate.
The two common rates
Most restaurants fall into one of two buckets:
- 5% GST, without input tax credit (ITC), the standard for most standalone restaurants, whether AC or non-AC, dine-in or takeaway. You charge customers 5%, but you can’t claim back the GST you paid on your inputs (rent, ingredients, equipment).
- 18% GST, with ITC, typically applies to restaurants located within hotels where the room tariff crosses a specified threshold. Here you charge 18% but can offset the GST on your inputs.
The input tax credit trade-off
This is the part people miss. The 5% rate looks cheaper for the customer, but the restaurant eats the GST on everything it buys. The 18% rate is higher on the bill, but the business recovers input tax. Neither is “better”, it depends on your category, and for most standalone outlets the 5%-without-ITC structure is simply the rule, not a choice.
Delivery and cloud kitchens
Food supplied through your own channels follows your applicable restaurant rate. When orders come via aggregators, GST responsibilities can shift to the platform under current rules, so your reporting needs to reflect where the tax obligation actually sits.
Why getting it wrong is expensive
Bill 5% when you should bill 18% (or vice-versa) across thousands of orders, and the correction, plus interest, is painful. The rate isn’t something a cashier should have to remember per order.
Bill it automatically
The clean way is to set your applicable rate once and let the system apply it to every invoice, with the CGST/SGST split and HSN codes filled in. Change in the rules? Update it in one place. That’s how Piatto Pro handles restaurant GST, the right rate, the right split, on every bill, without anyone doing tax maths at the counter.
Not sure of your exact rate? Confirm with your accountant, category and location both matter. And use our free GST calculator to check the split on any amount.