Restaurant & Hospitality GST

Rate structures and thresholds for this sector are periodically revised. This article is for general information and does not constitute tax advice.

Standalone Restaurants: 5% Flat, No ITC

A standalone restaurant, not part of a hotel, charges 5% GST with no ITC available on inputs. This is a fixed rate with no opt-in for the higher rate with ITC; there’s no election available the way there is for real estate.

Where It Gets Specific: The Room Tariff Trigger

A restaurant within a hotel that had a declared room tariff of ₹7,500 or more per night, per unit, at any point in the preceding financial year, is reclassified as a “specified premises” restaurant: 18% GST, with ITC available, instead of the standard 5%. It’s the previous financial year’s declared tariff that governs, not the current room rate; a hotel that raised prices mid-year carries the higher classification into the following year regardless of what it charges now. Below ₹7,500, the restaurant stays at 5% with no ITC, same as any standalone restaurant.

Accommodation Itself

Hotel accommodation is taxed on a slab structure keyed to the actual transaction value charged per unit per day, not the declared tariff: no GST up to ₹1,000, then progressively higher rates as the value crosses set thresholds, up to 18% for high-value luxury accommodation. This runs on its own logic separate from the restaurant classification, even within the same property.