Running a restaurant, café, cloud kitchen or food business in Kerala comes with specific GST obligations. The applicable GST rate depends on the type of restaurant and whether it is part of a hotel. Many restaurant owners are confused about the applicable rate and whether they can claim ITC. This guide clears it all up for 2025.
GST Rates for Restaurants in India 2025
Standalone Restaurants (AC or Non-AC): 5% GST (2.5% CGST + 2.5% SGST) with no ITC. This rate applies to all standalone restaurants regardless of whether they have AC or not (the distinction between AC and non-AC was removed in November 2017). No ITC is available on inputs (ingredients, packaging, equipment, etc.).
Restaurants in Hotels with Room Tariff Above ₹7,500 per night: 18% GST (9% CGST + 9% SGST) with ITC available.
Outdoor Catering: 18% GST with ITC available.
Composition Scheme Restaurants (Not Serving Alcohol, Turnover up to ₹1.5 crore): 5% GST with no ITC, but with significantly simplified compliance.
GST on Takeaway and Parcel Orders
The GST rate applicable to food consumed at the restaurant also applies to takeaway and parcel orders from the same restaurant. A 5% standalone restaurant must charge 5% GST on takeaway orders as well.
GST on Swiggy and Zomato Orders
When food is ordered through e-commerce food aggregators like Swiggy and Zomato, they are required to collect TCS (Tax Collected at Source) at 1% under GST on behalf of all restaurant partners listed on their platform. The restaurant receives payment net of TCS and can set off the TCS amount against their monthly GST liability.
From January 2022, Swiggy and Zomato themselves became liable to pay GST on restaurant services supplied through their platforms — meaning the GST on food delivered through these apps is now payable by the aggregator (not the restaurant). Restaurants must still file their own GST returns.
GST on Alcohol Sales
Alcohol for human consumption is outside the GST ambit — it is taxed under state excise duty. GST does not apply on the sale of alcohol in restaurants. However, if a restaurant supplies both food (GST) and alcohol (no GST), the food and beverage portions must be clearly separated on the bill.
GST Registration for Restaurants
A restaurant must register for GST if its aggregate turnover (including food sales but excluding alcohol) exceeds ₹20 lakh per year. Note: Even the smallest restaurant will quickly cross this threshold. Most restaurants in Kerala should be GST-registered.
Invoicing Requirements
Every GST-registered restaurant must issue a GST invoice with the establishment's GSTIN, HSN/SAC code (SAC 996331 for restaurant services), applicable GST rate and amount. The invoice must be generated for all dine-in, takeaway and catering orders.
Conclusion
GST compliance for restaurants in Kerala is straightforward once you understand the applicable rate and filing requirements. SPOTON provides end-to-end GST services for restaurants and food businesses — from registration to monthly filings and annual returns. Contact us today.
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