GST on Restaurants, Food Delivery & Cloud Kitchens (Zomato/Swiggy) 2026: Complete GST Rates, ITC Rules & Compliance Guide

GST on restaurant food in India in 2026 sits at 5% for almost every dine-in, takeaway, and delivery order but there's an 18% catch that trips up hotel restaurants, caterers, and even a few cloud kitchen owners who assumed they'd read the rules correctly. If you've ever squinted at a Zomato invoice wondering why the tax line doesn't quite add up, or you're setting up a cloud kitchen and don't know whether you need to register from day one, this piece walks through it properly : no jargon, no guesswork, just what the law says in 2026.

Quick answer: since most people just want this bit: standalone restaurants, cafés, dhabas and cloud kitchens charge 5% GST and can't claim any input tax credit on it. Restaurants sitting inside hotels where a room costs ₹7,500 or more a night are the exception, they charge 18% and do get to claim credit. That's really the whole rulebook in one sentence. Everything below explains why, and what it means for your wallet or your business.

What Changed After the September 2025 GST Overhaul

The GST Council's rate rationalisation, effective from 22 September 2025, quietly removed the old 12% slab that used to sit between the two extremes. Restaurants that once had a middle option no longer do, they're now firmly in the 5% or 18% camp, depending purely on where they're located and what they serve. For diners, this hasn't changed much visibly. For restaurant owners deciding between the composition scheme and regular registration, it's made the decision a lot simpler, if slightly less flexible.

So, 5% or 18% : Which One Applies to You?

Here's the part people search for constantly: "is restaurant GST 5 or 18 percent." Honestly, it comes down to location, not cuisine, décor, or whether there's an AC running.

If your restaurant charges 5%, you're keeping bills lower for customers but eating the GST cost on your own rent, ingredients and equipment. If you're in that rare 18% bracket, you're paying more tax upfront but clawing some of it back through credit. Neither is objectively "better", it depends on your margins and how much you spend on taxable inputs.

Who Pays GST on Your Zomato or Swiggy Order?

This one confuses even seasoned restaurant owners. The short version: it's not you,the responsibility of depositing this tax has shifted from the restaurant to the app.

Section 9(5) of the CGST Act made Zomato and Swiggy what's called "Electronic Commerce Operators." For any order placed through their apps, they collect and pay the 5% GST on the food value directly to the government. Your restaurant still shows up in the paper trail (you'll report these sales in your GSTR-1 and GSTR-3B for reconciliation), but the actual tax liability has shifted to the platform.

There's a wrinkle worth knowing about delivery fees, though they're not part of the "restaurant service" and get taxed separately at 18%, since delivering food is legally a different service from cooking it.

Most apps also deduct around 1% TCS from restaurant payouts under Section 52 ; a separate mechanism from the GST collection above, so don't mix the two up when reconciling your accounts.

Cloud Kitchens: Same Rules, Different Headaches

"Do I need GST for a cloud kitchen" is one of the most searched phrases among people starting delivery-only food businesses in 2026, and the answer surprises a lot of them.

Indian tax law doesn't treat a cloud kitchen as anything special. Whether you've got a dining hall with forty tables or a rented shared kitchen with zero seating, if you're preparing and supplying food, you fall under "restaurant services"- HSN code 9963, and you're taxed exactly like any restaurant: 5%, no credit.

Where cloud kitchens genuinely differ is registration timing. Normally, GST registration only becomes compulsory once turnover crosses ₹20 lakh a year. But the moment you list on Zomato or Swiggy, that threshold disappears; registration is required from your very first order, small business or not. This catches a lot of first-time founders off guard, since they assume the ₹20 lakh cushion applies to them too.

A few practical points for anyone running or planning a cloud kitchen:

One GST registration covers your entity, even if you're running four or five virtual brands out of the same kitchen.

The composition scheme (flat 5% on turnover, simpler quarterly filing) is available under ₹1.5 crore turnover, but most composition taxpayers aren't allowed to sell through e-commerce platforms, so if Zomato or Swiggy is your main channel, regular registration is usually your only real option.

Packaging and delivery charges billed separately still attract 18%, same as standalone restaurants.

Input Tax Credit: The Rule Nobody Explains Clearly Enough

Here's the part that affects your profit margins, not just your compliance paperwork.

If you're charging 5% GST which covers most restaurants and virtually all cloud kitchens then you cannot claim ITC. Not on rent, not on raw materials, not on kitchen equipment, not on packaging. Section 17(5) of the CGST Act blocks it outright. Every rupee of GST you pay on these inputs becomes a straight cost, quietly reducing your margin month after month.

The only way around this is landing in the 18% bracket; specified hotel premises or outdoor catering where ITC is fully available on eligible business expenses.

A quick gut-check on what's blocked at 5%:

Ingredients and raw materials - blocked

Rent on your kitchen or dining space - blocked

Kitchen equipment purchases - blocked

Aggregator advertising or marketing services - generally blocked

All of the above - fully claimable if you're taxed at 18%

Composition Scheme vs Regular Scheme: A Side-by-Side Look
 

 

Frequently Asked Questions

Q. Does Zomato or Swiggy charge GST separately from the restaurant? 

Yes, under Section 9(5), the platform collects and deposits the 5% GST itself for orders placed through the app, not the restaurant.

Q. Can a restaurant charging 5% GST still claim input tax credit? 

No. The 5% rate specifically comes without ITC ,you can't have both under current rules.

Q. Is there any GST difference between AC and non-AC restaurants? 

No, that distinction was scrapped years back. Both are taxed at the same rate today.

Q. Is a cloud kitchen taxed differently from a regular restaurant? 

Not really. Cloud kitchens fall under the same "restaurant services" category and pay the same 5% rate.

Q. Is service charge the same thing as GST? 

No, service charge goes to staff and is entirely separate from GST, which is a government tax, not a tip.

Q. Does GST apply to alcohol served with a meal? 

No. Alcohol sits outside GST altogether and is taxed under state VAT or excise duty instead.

Q. What GST rate applies to delivery charges on food apps? 

18%, since delivery is legally considered a separate service from the actual restaurant supply.

Q. Can a small cloud kitchen skip GST registration to stay under the radar? 

Only if it never sells through an aggregator and stays under ₹20 lakh turnover. Listing on Zomato or Swiggy removes that option immediately.

Conclusion

Whether you're ordering dinner or running the kitchen, the number that matters most in 2026 is 5% GST without ITC , that's the default for nearly every restaurant, delivery order, and cloud kitchen in the country. The 18% bracket is the exception, reserved for luxury hotel dining and outdoor catering, and it's the only door that opens up input tax credit. Get this one distinction right, and most of the confusion around restaurant GST simply disappears.

Rates referenced here are based on CGST Act provisions and GST Council notifications; always cross-check current notifications on gst.gov.in before filing.

Author Bio

Harshita Saini is an SEO Executive at LegalDev, where she leads SEO and content strategy for gstfilling.co. She researches the latest GST notifications, tax reforms, and compliance updates to create accurate, search-driven content for businesses across India.
Her expertise lies in simplifying complex GST laws into easy-to-understand guides, helping entrepreneurs, startups, and taxpayers stay compliant, avoid penalties, and make informed tax decisions with confidence.