GST on Food Items — Complete Rate List for Restaurant, Online and Home Food 2025

GST on Food Items — Complete Rate List for Restaurant, Online and Home Food 2026

Food is taxed under GST at wildly different rates depending on three things: where you buy it, how it is processed, and whether the seller is providing a service or selling goods. The same ingredient — curd — can attract nil GST if scooped loose from a dairy counter, 5% if sealed in a pre-packaged labelled cup, and 18% if served as raita at a restaurant inside a hotel charging Rs. 8,000 per room. For FY 2026-27, neither the restaurant rate structure nor the branded-versus-unbranded distinction has changed, but enforcement around Section 9(5) e-commerce liability, cloud kitchen registrations and pre-packaged labelling compliance has intensified sharply. This guide maps every relevant rate and the business decisions that flow from each one.

The Rate Map: Food in Five Structural Buckets

Understanding GST on food starts with recognising five structural categories:

1. Loose, unbranded staples — rice, wheat, dal, fresh vegetables, loose curd → Nil
2. Pre-packaged, labelled food in defined consumer pack sizes → 5% for staples; higher slabs for processed items
3. Processed, branded snack, bakery and confectionery items → 12% or 18%
4. Premium and aerated beverages → 28% + compensation cess
5. Restaurant services (a service, not goods) → 5% or 18% depending on hotel room-tariff linkage

The distinction between "selling food goods" and "providing a restaurant service" matters enormously. A sweet shop that sells boxed mithai over a counter is selling goods; the same shop with a few tables where customers eat on-premises is providing a restaurant service. Classification drives the rate, and getting it wrong creates either under-collection (a liability) or overcharging (a customer dispute).

Restaurant GST Rates: The 5% vs 18% Decision Tree

Standalone Restaurants and Dine-In Eateries

Every restaurant not inside a hotel — a neighbourhood dhaba, a standalone café chain, a fast-food counter, a pure-veg thali restaurant — pays GST at 5% without input tax credit (ITC). This applies whether the customer dines in, packs food to go, or orders over the phone.

The no-ITC rule is the direct cost of the lower rate. You cannot offset GST paid on groceries, cooking gas, kitchen equipment, or restaurant fit-out against your 5% liability. All of that input tax is a sunk cost. This has one underappreciated practical consequence: getting a GST-registered vegetable vendor instead of a mandi seller saves you nothing. Every rupee of GST on raw material becomes a dead cost that cannot be recovered.

Hotel Restaurants: When 18% Kicks In

A restaurant inside a hotel is taxed at 18% with full ITC if the hotel has declared a room tariff exceeding Rs. 7,500 per night at any point during the year. Note carefully: the test is the declared tariff, not the actual occupancy rate or the discounted booking price.

If a hotel lists rooms at Rs. 9,000 during peak season but fills them at Rs. 4,000 during the monsoon, the restaurant still attracts 18% throughout the year. A customer dining at a mid-range hotel pays 13 percentage points more in GST than they would at a standalone restaurant across the street for the same meal. Any restaurant operating inside a hotel should state clearly on the menu which rate applies and why — customers routinely question an 18% line on a bill.

Cloud Kitchens, Takeaways and Dark Kitchens

Cloud kitchens, ghost brands and pure-takeaway counters are treated identically to standalone restaurants: 5% without ITC. There is no carve-out for the absence of a dining room. Multiple ghost brands operating from one registered kitchen do not split their GST exposure — the aggregate turnover of the single kitchen entity determines the applicable threshold and scheme eligibility. CBIC enforcement has targeted this segment specifically, looking at cases where multiple brand registrations have been used to artificially stay below thresholds.

Outdoor and Event Catering

Outdoor catering at a client's premises generally attracts 5% without ITC. Where a caterer uses premises owned or leased by a hotel that itself crosses the Rs. 7,500 room-tariff threshold, the 18% rate with ITC may be triggered. Event planners and catering contractors must get the premises classification confirmed before signing a fixed-price contract. A 13-percentage-point rate miscalculation on a Rs. 15 lakh banquet is a Rs. 1.95 lakh hole in the margin.

Online Food Delivery and Section 9(5): Who Actually Pays the Tax?

How the ECO Liability Shift Works

Section 9(5) of the CGST Act 2017 makes Electronic Commerce Operators (ECOs) — Swiggy, Zomato and similar aggregators — the person liable to pay GST on restaurant services supplied through their platforms. This is not merely TCS (tax collected at source under Section 52); it is a complete substitution of the taxpayer.

The result in practice:

• The restaurant does not pay GST on orders received through the ECO.
• The ECO pays 5% on the food value to the government and cannot claim ITC on those inputs.
• The restaurant must still reflect the supply in its GSTR-1, flagged as "services where ECO is liable to pay tax under Section 9(5)."
• An unregistered restaurant using these platforms: the ECO still pays 5%, and the restaurant need not register solely on account of these platform supplies (provided aggregate turnover stays below the Rs. 20 lakh threshold).

Delivery charges billed by the ECO are a separate supply by the ECO — taxed at 18% as their own service. Platform convenience fees and subscription charges similarly attract 18%. These are not part of the restaurant service; they are the ECO's own revenue stream.

Worked Example: Dissecting a Rs. 720 Swiggy Order

The cloud kitchen receives its contracted share of the Rs. 640 food value (after the platform commission) and owes zero GST on this order. Swiggy deposits Rs. 46.40. The customer's invoice shows GST broken out; many see it bundled into a "platform fee" line.

A common accounting error: some cloud kitchen POS systems book the Swiggy-paid GST as the kitchen's own liability, creating phantom tax payable. If your balance sheet shows GST payable on Swiggy orders, raise it immediately with your tax consultant — you are double-counting a liability that does not exist.

GST on Packaged and Processed Food: Rates by Category

Branded vs Unbranded: The Threshold Decision Every Food Producer Must Make

Since July 18, 2022, the 5% GST rate applies to pre-packaged and labelled food in defined consumer pack sizes, regardless of whether the brand is a registered trademark. Even an unregistered hand-lettered name on a sealed packet is enough to trigger the rate. The test is the format of sale, not the brand's legal status.

• Loose/bulk rice, wheat flour (atta), dal, cereals → Nil GST
• Same product in pre-packaged, labelled consumer packs up to 25 kg → 5% GST
• This shift is permanent for that product line once you adopt the labelled-pack format.

Worked Example — Small Rice Mill Facing a Branding Decision

A rice mill in Haryana sells 25 kg labelled bags of Basmati. Annual sales: Rs. 80 lakh.

For a mill operating on 6–8% margins (approximately Rs. 4.8–6.4 lakh net profit on Rs. 80 lakh), the Rs. 4 lakh GST step-up consumes 60–80% of the profit unless prices rise. Buyers who are GST-registered can claim ITC on the 5% — so business-to-business sales to registered traders are less price-sensitive than direct retail. The mill must model this before printing its first labelled bag.

Rate-by-Category Quick Reference

Critical note on biscuits: All biscuit varieties — glucose, Marie, cream, digestive, butter — attract 18% without exception. This is one of the most common consumer misconceptions and business costing errors. The 18% rate has been in place since GST rollout in 2017 and has survived multiple petitions to the GST Council. Any food-business pricing model using a lower rate for biscuits will understate the tax liability.

Note on ice cream: Ice cream served at a restaurant is part of the restaurant service and taxed at 5% or 18% depending on the premises classification. Ice cream sold as a packaged product at a retail counter or through a franchisee outlet is taxed at 18%.

HSN code depth requirement: If your food business turnover exceeds Rs. 5 crore, invoices must carry 6-digit HSN codes. Below Rs. 5 crore, 4-digit HSN is sufficient. Get your product's HSN mapped correctly before the first invoice — reclassification disputes are retrospective.

Composition Scheme for Restaurants: When It Saves (and When It Costs)

Who Qualifies

Any restaurant with aggregate annual turnover up to Rs. 1.5 crore (Rs. 75 lakh for special category states notified under the GST Act, including Uttarakhand, Himachal Pradesh, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura) can opt for the composition scheme. The aggregate turnover test counts all supplies — goods and services — across all of India under one PAN, not just restaurant sales.

You are disqualified from composition if you:

• Have aggregate turnover above the applicable threshold
• Make any inter-state outward supply
• Supply restaurant services through an ECO (Swiggy/Zomato orders immediately disqualify you)
• Supply any goods that are not food and beverages alongside the restaurant service (complex combinations need specific advice)
• Are a casual taxable person or non-resident taxable person

What the Scheme Means in Practice

Under composition, you pay 5% of your aggregate turnover to the government. You do not charge GST to customers — your menu prices are all-inclusive. You must:

1. Issue a Bill of Supply, not a Tax Invoice. The words "Composition Taxable Person, not eligible to collect tax on supplies" must appear on every bill and at your premises entrance.
2. File Form CMP-08 quarterly — due by the 18th of the month following each quarter end (July 18, October 18, January 18, April 18).
3. File GSTR-4 annually — due by April 30 of the year following the financial year (frequently extended by CBIC; always confirm the current deadline on the GST portal before filing).
4. Maintain inward supply records; input tax credit cannot be claimed on anything.

Worked Example: Dhaba with Rs. 40 Lakh Annual Turnover

The compliance saving — 20 fewer return filings per year — is real and meaningful for a single-owner dhaba with no full-time accountant. But so is the Rs. 2 lakh annual cash outflow that cannot be recovered from customers without raising menu prices.

For a dhaba with 10–12% net margins on Rs. 40 lakh (approximately Rs. 4–4.8 lakh profit), paying Rs. 2 lakh in composition tax is a 40–50% hit on net income. The composition scheme makes sense when the owner places high value on compliance simplicity and can absorb the cost — or when the customer base is price-sensitive enough that a visible "GST extra" line on the bill would drive them away.

Common Mistakes and Pitfalls to Avoid

1. Billing 18% at a hotel restaurant that does not cross the Rs. 7,500 threshold If every room in the hotel is declared at Rs. 6,500 per night, the restaurant should be billing 5% — not 18%. Overcharged GST collected from customers must still be remitted to the government. It cannot be retained. Audit the declared tariff annually.

2. Conflating restaurant delivery with ECO delivery charges A restaurant that sends its own delivery rider with an order is providing a composite supply — delivery is ancillary to the restaurant service, and the whole bill is taxed at 5%. An ECO platform's delivery fee is 18% as a separate supply. Do not print an 18% GST line for your own delivery staff.

3. Continuing to invoice at Nil on pre-packaged consumer packs post-July 2022 Many small food manufacturers — particularly in rice, atta and pulses — continue to bill at Nil even though their product is sealed, labelled and sold in consumer-facing packs. CBIC scrutiny of this segment has increased. If your bags are sealed, labelled and intended for direct retail sale, the July 2022 change in law applies to you.

4. Composition restaurants making a single inter-state sale One food hamper shipped to a customer in another state, one catering contract outside your home state — either act disqualifies you from composition for the entire year. Review your customer geography before assuming composition eligibility is intact.

5. Cloud kitchens booking ECO-paid GST as their own liability POS integrations from 2019 and 2020 often did not account for the Section 9(5) liability shift. If your accounting software debits both a "GST payable — own supply" and the ECO-paid tax on the same food order, you are creating a phantom liability. Correct this in the system and reverse any excess provision.

6. Home food sellers assuming scale creates no obligation A home cook selling through social media or WhatsApp groups is providing a restaurant service. Once aggregate turnover crosses Rs. 20 lakh in a year (Rs. 10 lakh in special category states), GST registration is mandatory. Many home chefs operating at significant scale — say, Rs. 30–50 lakh annually across multiple platforms — remain non-compliant, unaware that the threshold applies to them.

7. Failing to display composition status at premises The requirement to display "Composition Taxable Person, not eligible to collect tax on supplies" is a statutory obligation, not a recommendation. Non-display can result in a penalty of Rs. 25,000 under Section 122 of the CGST Act 2017.

Advance Ruling: The Insurance Policy for New Food Products

The grey zone in food GST is widest in health, wellness and novel product categories. Organic loose produce: Nil. Same produce in a branded labelled pack: 5%. Fortified millet flour in bulk bags for government procurement: potentially Nil. The same product retailed under a health brand: 5% or possibly 12% if classified as a "preparation of cereals" under HSN Chapter 19 rather than milled grain under Chapter 11.

When you are launching a new food product and the HSN classification is genuinely ambiguous, file for an Advance Ruling from the Authority for Advance Rulings (AAR) in your state before raising your first invoice. The process is initiated on the GST portal under Services → User Services → My Applications → Advance Ruling. You will need to provide:

• A description of the product, its ingredients, manufacturing process and packaging format
• The HSN heading you believe applies and your reasoning
• Reference to any earlier AAR or AAAR rulings on similar products (for context)

The AAR's ruling binds the jurisdictional tax officers in that state and protects you from demands on the rate you applied, as long as you continue to supply the product in substantially the same form. The filing fee is nominal. The cost of skipping this step — a classification demand issued three years into your product's commercial life, with interest under Section 50 and penalty under Section 74 of the CGST Act — can easily reach 2–3× the principal tax amount for a growing brand.

For products sold across multiple states, check whether the AAR ruling of one state has persuasive value in others. The Appellate Authority for Advance Rulings (AAAR) decisions carry wider weight. Where classifications are genuinely contested and involve large volumes, the Advance Ruling process is worth the 60–90 day wait.

Key Takeaways

• Restaurant GST is 5% or 18% — nothing else. Standalone restaurants and most dine-in eateries charge 5% without ITC. Hotel restaurants with a declared room tariff above Rs. 7,500 per night charge 18% with ITC. Any other rate on a restaurant bill is a billing error that must be corrected.
• Section 9(5) makes Swiggy/Zomato the taxpayer on food orders. The restaurant owes zero GST on food supplied through these platforms; the ECO pays 5% on the food component. Delivery and platform fees are the ECO's own supply, taxed at 18%.
• Pre-packaged and labelled food is taxable from July 2022 onwards. Loose bulk staples remain at Nil; sealed consumer packs of the same product — even under an unregistered brand name — attract 5%. The format of sale, not the brand's trademark status, drives the rate.
• Biscuits are 18% across the board. Glucose, Marie, cream, digestive — there is no "basic biscuit" sub-category at a lower rate. Costing models that use 5% or 12% for biscuits are wrong.
• Composition saves compliance effort, not money. A composition restaurant pays 5% out of its own pocket and cannot show GST on the customer's bill, saving 20 return filings per year but absorbing the tax as a real cash cost. Model this against margins before opting in.
• Branding a food product triggers a permanent 5% liability on that line. Small millers, dal processors and rice traders who shift from bulk loose supply to pre-packaged consumer packs lose the Nil exemption permanently. Run the margin arithmetic before printing the first label.
• Get an Advance Ruling before launching health or novel food products. Fortified, organic, millet-based and plant-based alternatives sit in contested HSN territory. An AAR ruling before the first invoice costs very little; a retrospective classification demand three years later costs a great deal.