Food, beverages and the restaurant service rate maze
The same plate of food attracts different consequences depending on where it is served, who serves it and whether it is delivered.
Restaurant service attracts the concessional rate without input tax credit, with a different treatment for restaurants located in specified premises such as hotels above the notified tariff threshold, which are taxable at the standard rate with credit. Supplies through an electronic commerce operator in respect of notified services are taxed in the hands of the operator under Section 9(5). The characterisation questions that matter are whether the supply is restaurant service or a supply of goods, and whether the premises fall within the specified category.
The three questions
Is it restaurant service, or a supply of goods? Food supplied for consumption on the premises, or prepared and served, is restaurant service. Packaged food sold across a counter without any service element is a supply of goods at the rate applicable to the goods. The line matters because the credit consequence differs.
Are the premises specified premises? Restaurants located in premises where the value of supply of accommodation exceeds the notified threshold are taxed at the standard rate with credit rather than the concessional rate without credit. The threshold and the manner of determining it have changed, and the declaration mechanism must be verified for the period.
Is the supply made through an electronic commerce operator? For notified services under Section 9(5), the operator is liable to pay the tax as if it were the supplier, and the restaurant does not charge tax on those supplies.
The disputes
Takeaway and delivery from a restaurant, where the department and taxpayers have differed on whether the supply remains restaurant service. The prevailing administrative view treats takeaway from a restaurant as restaurant service.
Cloud kitchens with no dine in facility, where the same question arises without any premises based service element.
Bakery and sweet shop counters combined with seating, where part of the turnover is goods and part is restaurant service, and the apportionment is contested.
Outdoor catering and event catering, which are separate entries with their own rates and credit consequences.
Canteens run by a contractor in an office or factory, where the recipient's credit position under Section 17(5)(b) interacts with the supplier's rate.
The operational discipline
Segregate the point of sale data between restaurant service and goods, at the transaction level, from the start. Reconstructing it later is impossible.
Where the premises are potentially specified premises, keep the accommodation tariff record for the relevant period and file any declaration the rules require.
For platform supplies, reconcile the operator's Section 9(5) reporting to your own records monthly, because a mismatch produces a demand on you for tax the operator was liable to pay.
Where credit is not available on the concessional rate, ensure procurement pricing reflects that; it is a cost, not a recoverable.
What to do on Monday
Segregate the point of sale data between restaurant service and goods from day one.
Keep the accommodation tariff record where the specified premises question can arise, and file any prescribed declaration.
Reconcile platform Section 9(5) reporting to your own records monthly.
Price procurement on the basis that credit is unavailable under the concessional rate.
This page states the general position. A reader with a specific question on their own facts may write to the GST practice at AMLEGALS.
Write to the GST practiceQuestions we are asked on this
Is takeaway restaurant service?
The prevailing administrative position treats takeaway from a restaurant as restaurant service. Verify the current clarification for the period and keep the point of sale evidence.
Do we charge tax on supplies through a delivery platform?
For notified services under Section 9(5) the operator pays the tax. Reconcile the operator's reporting to your records every month.
What are specified premises?
Premises where accommodation is supplied above the notified threshold, in which case the restaurant is taxed at the standard rate with credit. The threshold and the declaration mechanism must be checked for the period.
Is credit available on restaurant inputs?
Under the concessional rate, no. That is the trade off, and it must be priced.
How is a combined bakery and seating outlet treated?
The turnover must be segregated between goods and restaurant service at the transaction level. An apportionment done later is contested and usually loses.
In this cluster
- GST 2.0: two slabs did not end classification litigation, they moved the battle line
- Rate change transition: time of supply, credit notes and stock in hand
- Classification disputes under GST: the principles the courts apply
- Westinghouse Saxby: the sole or principal use test and the end of easy classification
- HSN, common parlance and the General Rules of Interpretation
- Composite supply versus mixed supply: the test, and the tax
- Principal supply in bundled contracts: getting the rate right
- Textiles and apparel: the rate structure and the disputes it produces
- Pharmaceuticals and medical devices: the concession and its boundaries
- Automobiles and auto components: the rate bands and the component question
GST Insights is published by AMLEGALS for general information. Law stated as on 3 September 2026. Not advice on any particular set of facts; not an advertisement or a solicitation under Rule 36 of the Bar Council of India Rules. Readers with a question on their own facts may write to the GST practice of their own accord.