What is the GST on Food Items in India?
08 Dec, 2025
By Online Legal India
Published On 08 Dec 2025
Category GST
GST is a single and unified tax system that affects every purchase, including our daily food items. In this system, the 56th GST Council Meeting has created several changes for the food sector and restaurants. Any consumer, businessman, or budget conscious individual must understand the GST on food items. Thus, the GST is levied depends on the restaurants type and services provided. In this piece of writing, you will learn about the GST on food items and more.
In India, the rate of GST on food items and restaurant services depends on various factors. It includes the type of establishment, nature of supply, which means branded or unbranded, and the nature of service (dine in or takeaway).
As per the current guidelines, it specifies that:
The GST on restaurant food replaced the earlier VAT and Service Tax system to smoothen the path of tax compliance for the sector. However, the service charge levied by some restaurants remains separate from the GST and is kept discretionary for the consumers.
However, food falls under the range of an applicable restaurant GST rate, whether served in a restaurant or packed and branded or sold in its unprocessed form. The latest rate slabs improve the understanding of tax liabilities among businesses and consumers.
In the case of alcoholic liquor for human consumption, there is no GST is payable. It continues to be taxed by individual State Governments through excise duty and State-level taxes. However, no GST on alcohol is levied. State-level VAT is charged on Alcohol.
Restaurants located within hotels falling under the category of “specified premises” will charge 18% GST for each bill starting from 22nd September 2025. According to the latest circular issued by the government, restaurants in hotels other than “specified premises” can continue with the current 5% GST structure. They can also switch over to the new 18% GST structure, at their discretion and depending upon the tax structure.
This means that choosing the higher rate will increase costs for the customer. This impact can be reduced by hotels through effective planning and operational changes to manage pricing and customer experience.
Restaurant bills contain various components before the implementation of GST. Here are the key components:
Thus, most of the items on the menu were taxable at various rates under the system of VAT. These rates make billing more complicated. It focuses on standardising it under GST on food by replacing different taxes with a single tax rate applicable to the entire bill.
Restaurants under GST are kept under the 5% GST slab, with no option to claim Input Tax Credit (ITC). In contrast, 18% GST rate is charged with the option to claim ITC. The rate will be depend on the place in which the restaurant is located. For example, restaurants in hotels would attract a higher GST rate if the room tariff exceeds a particular amount.
However, the GST applicable to restaurant food services depends on the nature of the establishment and various other factors. Here is a detailed overview:
| Type of Restaurant Food Service | GST Rate |
|---|---|
| GST on standalone restaurants, including takeaway (Non-AC) | 5% GST with no Input Tax Credit (ITC) |
| GST on standalone restaurants, including takeaway (AC) | 5% GST with no Input Tax Credit (ITC) |
| GST on restaurants within hotels (room tariff below ?7,500; not “specified premises”) | 5% GST without ITC or 18% GST with ITC |
| GST on outdoor catering services | 18% GST with Input Tax Credit |
| GST on Quick Service Restaurants (QSR) | 5% GST with no Input Tax Credit |
| Meals/food services by Indian Railways/IRCTC or licensees (in trains or at platforms) | 5% GST with no Input Tax Credit |
| Food/drink served in cafeteria/canteen/mess operating on contract basis (office, industry, school, college, etc.), not event-based | 5% GST with no Input Tax Credit |
| Food services provided along with renting of premises for organizing functions | 18% GST |
| Other accommodation, food, and beverage services | 18% GST |
Many food items falls under the 5% GST slab rate. There are several essential foods including fresh fruits, milk, veggies, and meat are considered as the exempt from GST. The council has made some notable changes about the processed, packaged, and luxury items. Here are the applicable changes:
| Categories of Food Items | Old GST Rate | New GST Rate |
|---|---|---|
| UHT milk, pizza bread, pre-packaged paneer, khakhra, chapati, roti, etc. | 5% | Nil |
| Paratha, parotta, and other Indian breads | 18% | Nil |
| Condensed milk, butter, dairy fats, cheese | 12% | 5% |
| Dried nuts and fruits (almonds, pistachios, etc.) | 12% | 5% |
| All dry fruits and nuts (branded or pre-packed) | 12% | 5% |
| Animal fats, marine animal fats, lard, etc. | 12% | 5% |
| Refined sugar, sugar confectionery, pasta, extruded snacks, etc. | 12% | 5% |
| Preserved vegetables, jams, jellies | 12% | 5% |
| Fruit & vegetable juices, tender coconut water (pre-packaged) | 12% | 5% |
| Malt & vegetable extracts, coffee & tea extracts | 18% | 5% |
| Cocoa products (chocolate, cocoa butter, cocoa powder, etc.) | 18% | 5% |
| Pan masala | 28% | 60% (commonly shown as 40–60% with GST + Cess) |
| Sugary & flavoured beverages (carbonated, caffeinated) | 18% or 28% | 40% |
| Other non-alcoholic beverages | 18% | Only carbonated/caffeinated/sugar-sweetened → 40%; plain juices, tender coconut water, milk-based drinks → 5% |
Thus, the government has eliminated the tax burden for important food items and increased the tax on luxury and indulgent items.
In India, restaurants are fall under two broad categories for the purpose of GST:
The services provided by a standalone restaurant which is essentially independent of hotel accommodation. This service does not offer any accommodation services separately and normally taxed at 5% GST rate. However, they are not allowed to take the benefit of any ITC of the amount of GST paid on inputs. This includes a 5% GST rate on food as well as beverages served by standalone restaurants.
Restaurants in hotels with a room tariff of at least Rs 7,500 per day will also fall under the different GST category. An 18% GST rate will be charged to them on all their services for food and beverages served at these restaurants. The key difference is that there is an eligibility to claim Input Tax Credit (ITC) on the GST paid on inputs. This can include raw materials, services, and other supplies used to provide the restaurant services.
As per the GST regime, the Service Tax and VAT amount was combined into a single and unified tax rate. There can be a charge regarding service for the food bills.
Below is the table outlines the key examples with the assumptions of VAT, which is applicable at 100% of the value without any abatement:
| Particulars | Billing under the VAT regime | Billing under the GST regime |
|---|---|---|
| Total Bill | 5000 | 5000 |
| Output Tax | ||
| VAT @ 14.5% | 725 | — |
| Service Tax @ 6% | 300 | — |
| GST @ 5% | — | 250 |
| Total output tax liability | 1025 | 250 |
| Input Credit | ||
| VAT Input Tax Credit (no ITC on ST) | 75 | — |
| GST Input Tax Credit (ITC) | — | — |
| Final Output Tax Liability | ||
| VAT | 650 | — |
| Service Tax | 300 | — |
| GST | — | 250 |
In this example table, you will see that the total payable amount will be applicable to the tax authorities under the latest GST regime sums up to Rs. 950. As per the GST, the net outflow from the pocket will attract Rs. 250.
Below is the key impact of GST on food items and restaurants:
Multiple taxes have been replaced by a single taxation, which simplifies the GST on restaurants. Tax compliance has become simple and less costly for restaurants and food establishments. It happens due to the imposition of this tax on restaurant food.
Thus, the updated restaurant GST rates are higher than those applicable under the earlier tax system. This has raised the tax burden for restaurants and food businesses.
Input Tax Credits for taxes paid on purchases are available under GST on restaurant services. This helps to reduce the entire tax liability for restaurants and food businesses.
GST has facilitated more transparency in the food industry. Businesses must maintain proper records and file regular tax returns. This helps to reduce tax evasion and enhancing compliance.
There is mixed outcomes in prices which have been experienced in the restaurant and food business due to the GST on restaurants. There is a higher tax rates of certain items. It is because of the Input Tax Credit has reduced the process for some items. Thus, we can say that the impact on prices has been moderate.
Conclusion
Therefore, it is important to know GST on food to make financial decisions for consumers and businesses. These different tax rates on several pieces of food also help you to understand which food item falls under the exempt, lower, or higher slabs. So, a GST on food items helps you to handle food costs with more confidence and greater efficiency. If you have any queries about it, contact Online Legal India.
The rate of GST on food items varies widely. Many essentials remain tax-free which means 0% rate. The processed and restaurant food items normally attract 5% or 18% which depending on packaging, branding and type of service.
The main slabs of GST on food items are divided into two categories:
Most common packaged and lightly processed food items have come into the 5% slab. It is because the 12% slab has been eliminated and it is effective from 22 nd September 2025. This includes:
The GST on food served in restaurants, even those with AC and serving takeaway food, charge 5% GST on the bill, but they cannot claim Input Tax Credit (ITC). Food served in restaurants in hotels is levied at 18% GST in case the hotel charges Rs. 7,500 or more per night for a room, with ITC available to the hotel.
Yes, a few items fall under higher brackets. This 18% rate typically applies to various luxury or high-end items. In contrast, a special GST of 40% will apply with cess to goods in the luxury/sin category. This includes all carbonated and caffeinated beverages regarding sodas and energy drinks to discourage consumption.
Disclaimer
This article is for informational purposes only and does not constitute legal advice. Online Legal India is a digital platform. If you require legal assistance, we strongly recommend consulting a qualified lawyer or law firm.
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