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Indian restaurant GST is split across at least three regimes — 5% no-ITC for standalone restaurants, 18% with-ITC for outdoor catering, and 5% or 18% for hotel-restaurants tied to a room tariff threshold of ₹7,500 — and a single F&B operator running multiple property types must reconcile parallel ITC streams without cross-contaminating tax credits.
Classify each outlet by the rate notification — standalone, outdoor catering, hotel below threshold, hotel above threshold — apply the correct rate at point of sale, segregate ITC-eligible from ITC-blocked input GST, reconcile aggregator GSTR-2B entries against Section 9(5) reverse charge rules, and produce a per-outlet GSTR-3B contribution that sums to the consolidated entity-level filing.
Outlet-to-rate-regime mapping table; ₹7,500 room tariff threshold flag for hotel-restaurants; Section 9(5) aggregator service recognition; ITC eligibility filter per outlet on rent, ingredients, equipment, and aggregator commission; GSTR-2B aggregator entry parser and reconciliation logic.
A monthly GSTR-3B that correctly applies 5% or 18% per outlet, claims ITC only on eligible streams, reconciles the aggregator GSTR-2B operator-paid GST against the restaurant's own output, and prevents the most common error: claiming ITC on a no-ITC outlet or paying GST twice on a Section 9(5) aggregator order.
A hospitality group in Mumbai operates six F&B locations: three standalone restaurants, an outdoor catering arm, a banquet hall, and a restaurant inside a five-star hotel with rooms at ₹12,000. Three of these supply through Zomato and Swiggy. The standalone restaurants charge 5% no-ITC. The catering and banquet operations charge 18% with-ITC. The hotel-restaurant charges 18% with-ITC because the room tariff exceeds ₹7,500. The same legal entity holds one Maharashtra GSTIN. This article is for finance teams reconciling parallel GST regimes within a single restaurant or F&B group.
What Restaurant GST Reconciliation Across 5% and 18% Involves
Restaurant GST reconciliation in India is the process of applying the correct rate per outlet under Notification 11/2017 (CGST Rate) and its amendments, segregating ITC-eligible input tax from ITC-blocked input tax, and reconciling output liability against aggregator-paid GST under Section 9(5) of the CGST Act. The output is a monthly GSTR-3B that correctly handles both regimes within the same GSTIN without contamination between the two ITC streams.
The complication unique to India is that the 5% rate carries no input tax credit while the 18% rate carries full ITC. For a multi-outlet operator, the same purchase invoice — say, a vegetable supply going to both a 5% and an 18% kitchen — must split its input GST between claimable and non-claimable buckets. This split must reconcile back to GSTR-2B at vendor level, not at outlet level, because the vendor sees one GSTIN.
How the 5% vs 18% Rate Test Works
Standalone Restaurants — 5% No-ITC
Any restaurant not located in a hotel with declared room tariff of ₹7,500 or above per unit per day falls in the 5% no-ITC bracket. This includes QSR chains, casual dining, fine dining, cloud kitchens, and aggregator-only kitchens. The 5% rate applies to dine-in, takeaway, and aggregator orders alike. No ITC is available on rent, equipment depreciation, marketing spend, or aggregator commission GST — these flow to expense gross.
Outdoor Catering and Banquet — 18% With-ITC
Outdoor catering services and banquet operations are taxed at 18% with full ITC. The distinction from a regular restaurant is that catering is supplied at the customer’s premises or a third-party venue under a contract, while banquet operations are typically tied to event-based supply. The 18% rate allows the operator to claim input credit on raw materials, equipment, transport, and event-related expenses. Misclassifying a catering supply as restaurant supply at 5% leaves the input credit unclaimed and produces under-recovery on every event.
Hotel-Restaurants — Tariff-Triggered
Restaurants located inside a hotel are taxed at 5% no-ITC if the highest declared room tariff is below ₹7,500 per unit per day, and 18% with-ITC if any room category is at or above ₹7,500. The test is applied to the published tariff, not to discounted rates actually charged. A hotel that lists rooms at ₹8,500 but sells most nights at ₹6,000 still falls in the 18% with-ITC bracket. The test must be reviewed at the start of each financial year and any change documented in the GST registration profile.
Restaurant GST Rate Reference
| Outlet Type | GST Rate | ITC Available |
|---|---|---|
| Standalone restaurant (dine-in, takeaway, aggregator) | 5% (2.5% CGST + 2.5% SGST) | No |
| Outdoor catering | 18% (9% CGST + 9% SGST) | Yes |
| Banquet hall service | 18% (9% CGST + 9% SGST) | Yes |
| Hotel-restaurant where any room tariff is below ₹7,500 | 5% (2.5% CGST + 2.5% SGST) | No |
| Hotel-restaurant where any room tariff is ₹7,500 or above | 18% (9% CGST + 9% SGST) | Yes |
India Compliance Angle: Section 9(5) and GSTR-2B Reconciliation
Section 9(5) of the CGST Act, amended for restaurant services through aggregators effective January 2022, makes the e-commerce operator liable to pay GST on restaurant services supplied through the platform. The restaurant does not separately remit output tax on these supplies — Zomato or Swiggy pays it. However, the restaurant’s own books must record gross revenue with the corresponding output tax, and the aggregator-paid GST must be reconciled against GSTR-2B entries. The GSTR-2B carries a special section showing aggregator-paid output tax under Section 9(5). For a 5% restaurant, this is straightforward. For an 18% with-ITC outlet that is also on aggregators, the reconciliation must distinguish aggregator-paid output (Section 9(5)) from restaurant-paid output (direct dine-in) within the same outlet — failure to do so produces double payment or under-payment that surfaces in GSTR-9C annual return audit.
Multi-outlet F&B operators using reconciliation software India configure outlet-to-rate-regime mapping at the master data level and apply ITC eligibility filters per outlet, so a single GSTIN can host parallel 5% and 18% streams without cross-contamination. Payment gateway reconciliation covers the direct ordering channel where dine-in cards, UPI payments, and brand-website orders settle through Razorpay, PayU, or Cashfree. The GST Portal publishes Notification 11/2017 (CGST Rate), its amendments, and the Section 9(5) aggregator framework that governs restaurant tax classification. For pillar context, see restaurant reconciliation India.
For the restaurant chain industry surface, see the Restaurant Chains industry guide. For the buying-intent surface covering this rail, see the restaurant reconciliation software for India overview, and for a head-to-head against the aggregator-side reconciliation tool category, see TransactIG vs Cointab.
The questions below address the rate-regime classification issues most frequently raised by Indian restaurant finance teams.