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Restaurant GST Rules 2026: The Definitive Owner's Handbook

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Setuverse Team
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Restaurant GST Rules 2026: The Definitive Owner's Handbook

GST compliance is often the biggest headache for restaurant owners in India. With rules changing frequently, it's easy to make mistakes that lead to hefty fines. Whether you run a cafe, a cloud kitchen, or a fine-dining establishment, understanding your tax liability is critical.

Pro Tip: If your turnover exceeds ₹5 Crore, E-Invoicing is now mandatory. Setuverse handles this integration automatically.

The Golden Rule: 5% vs 18%

The 5% Slab (No ITC)

Most standalone restaurants (AC or Non-AC) fall here. You charge 5% GST on the total bill.

  • The Catch: You cannot claim Input Tax Credit (ITC) on any purchases (rent, raw materials, electricity).
  • Best For: Small to mid-sized cafes where raw material costs are relatively stable.

The 18% Slab (With ITC)

This applies only to restaurants located inside hotels where the room tariff is ₹7,500 per night or above.

  • The Benefit: You can claim ITC on almost everything you buy for the business. This can significantly reduce your effective tax burden.

The "Food vs Alcohol" Complexity

This is where most owners make mistakes.

  • Food: GST applies (usually 5%).
  • Alcohol: Liquor is outside the GST net. It attracts VAT (Value Added Tax), which is a state-level tax.
  • Billing: Your invoice must show Food at 5% GST and Liquor at the applicable State VAT (e.g., 20% or 30%). You cannot charge GST on Alcohol.

GST on Home Delivery (Swiggy/Zomato)

Under Section 9(5) of the CGST Act, E-commerce Operators (ECOs) like Swiggy and Zomato are liable to pay GST on behalf of the restaurant.

  • However: The restaurant is still responsible for reporting these sales in their GST returns as "Exempt" or "Zero-rated" to avoid double taxation.

Why Manual GST Calculation is Dangerous

The risk of a "Mismatched Return" is high. If your sales records don't match your GST filings, the department will issue a notice.

Automate Compliance with Setuverse

Why do the math yourself? Setuverse is built for Indian tax laws:

  • Auto-Split Bills: Our POS automatically separates Food (GST) and Liquor (VAT) on the same invoice.
  • RCM Alerts: The system flags payments to unregistered vendors where you might owe Reverse Charge GST.
  • One-Click GSTR: We generate your GSTR-1 and GSTR-3B ready for upload to the portal.

Stay compliant and stress-free. Try Setuverse for free.