GST INPUT CLAIM FOR RESTAURANT

This query is : Resolved

Quick Summary

Restaurants charging a 5% GST rate on food sales are generally not eligible to claim Input Tax Credit (ITC) on purchases, including food ingredients, rent, or commissions from delivery platforms like Zomato. This restriction applies even if these purchases attract a higher GST rate. The only exception is for restaurants operating under the 18% GST slab, often those located in hotels with higher room tariffs, which can claim ITC on their inputs and expenses.

Mohanraj J

Mohanraj J (Querist)
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09 October 2025 Hi

A restaurant is making 5% GST for selling all types of food. But, purchasing the products for making food at different rates of GST like 5%, 12% or 18%, In addition, a restaurant is paying 18% GST for restaurant monthly rent.
In this scenario, a restaurant can avail ITC for purchasing different rates of food making products and Rental GST as well order through Zomato ITC 18%?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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09 October 2025 A restaurant charging 5% GST on food sales cannot claim Input Tax Credit (ITC) on purchases made at varying GST rates (such as 5%, 12%, or 18%), on rent (GST at 18%), or on any Zomato/Swiggy fees at 18%. The 5% GST rate for restaurants is specifically provided on the condition that no ITC is availed on goods and services used for supplying restaurant services.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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09 October 2025 GST and ITC Rules for Restaurants
Regular Restaurants Charging 5% GST: These restaurants must not claim ITC on any inputs—including food ingredients, other supply purchases, rent, or services like platform commissions. The restriction applies regardless of the GST rate paid on purchases, including those incurred for rent or through platforms like Zomato.

Zomato/Swiggy Commissions: While Zomato and Swiggy may charge 18% GST on commission billed to restaurants, restaurants paying 5% GST output are not permitted to claim ITC on these commissions under the no-ITC restriction.

Exception—18% GST Slab: Only restaurants located inside hotels with room tariffs above ₹7,500 or those falling in certain categories and charging 18% GST are allowed to avail ITC on inputs, rent, or commissions—they do not operate under the restricted 5% no-ITC regime.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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09 October 2025 Restaurant owners should be aware that the choice of GST rate (5% vs. 18%) fundamentally determines their ITC eligibility. The law is strict: opting for the 5% concessional rate comes with the explicit condition of forfeiting all related ITC, including ITC on rental GST and purchases, regardless of the GST rate paid on them.

In short, if the restaurant continues to operate under the 5% GST regime, ITC cannot be claimed on rent, ingredients, or platform fees, even if these attract GST at higher rates.

Mohanraj J

Mohanraj J (Querist)
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09 October 2025 Dear Sir, Thanks a lot for your time to answering me and appreciate.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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09 October 2025 You are welcome.

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