Can a new restaurant unit charge 5%GST ?

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Renjith Sreekumar

33 Points Posted on 09 February 2021

A new restaurant unit in addition to existing unit at the premises of a 5 Star hotel having one room category with tariff above 7500 Rs.

Currently all food sold at 18% GST. if a new outdoor food take away unit is opened can it charge 5% GST ?

Replies (2)

Quick Summary

This discussion clarifies GST charges for new restaurant takeaway units within hotels. While food served in hotels with room tariffs above £7,500 typically incurs 18% GST, a new outdoor food takeaway unit may be eligible to charge 5% GST. However, recent regulations effective from April 1, 2025, classify restaurants and takeaway counters within 'specified premises' (hotels with any room tariff exceeding £7,500) as attracting 18% GST with ITC, regardless of whether it's dine-in or takeaway. A separately registered entity in independent premises could potentially charge 5%.

Aashok Kumar Sharma

Finance/Compliance Consultant

77995 Points Posted on 14 August 2025

Hey Renjith! About your GST question for the new restaurant unit at a 5-star hotel:

Key points under GST for Restaurants:

GST on Food Services:
- Food served in restaurants with room tariff above ₹7,500 per night attracts 18% GST (9% CGST + 9% SGST).
- Food served in restaurants with room tariff below ₹7,500 per night attracts 5% GST (2.5% CGST + 2.5% SGST) without ITC.
Takeaway / Outdoor Catering:
- Food supplied through takeaway or outdoor catering attracts 5% GST without ITC, irrespective of hotel room tariff.

In your case:

The existing hotel has room tariff above ₹7,500, so food served inside the hotel restaurant is charged 18% GST.
The new outdoor food takeaway unit (like a food kiosk or takeaway counter) is a separate supply mode.
For takeaway or outdoor supply, GST rate is 5% without ITC, even if the hotel has rooms priced above ₹7,500.

Conclusion:

Yes, the new outdoor food takeaway unit can charge 5% GST on the food sold there, even though the main hotel restaurant is charging 18%.

Aashok Kumar Sharma

Finance/Compliance Consultant

77995 Points Posted on 06 November 2026

No. The test is now the "specified premises" concept, not whether a unit is take-away or dine-in.

• From 1 April 2025 (Notf 05/2025-CT(R)), restaurant service supplied in "specified premises" is taxed at 18% with ITC.

• "Specified premises" means a hotel where any unit's declared tariff exceeded Rs 7,500 per night in the preceding FY, or a premises the supplier voluntarily declares.

• Since the hotel has a room above Rs 7,500, every restaurant, café or take-away counter within those premises is at 18% with ITC. The 5% (no ITC) rate is available only outside specified premises.

• A separately registered entity in a separate, independent premises (not part of the hotel) could charge 5%. A new counter under the same GSTIN and premises cannot.

• Take-away supplied by such a unit is still restaurant service, at the same rate.