Table of Contents
GST Rates for Different Types of Restaurants (Effective 1st April 2025):
GST Rates for Restaurants post the changes effective from 1st April 2025, including the latest Notification No. 05/2025–CTR: Key Update: Scrapping of Declared Tariff :
- From 1st April 2025, declared tariff will no longer be used to determine GST applicability.
- Instead, the actual tariff charged in the preceding financial year will be used.
- Threshold: INR 7,500 per day per unit (i.e., actual value of accommodation supply).
Restaurants in Hotels with Tariff ≤ INR 7,500/day
As per Notification No. 05/2025–CTR, they now have two options:
- Pay GST @ 5% without ITC (Input Tax Credit) – Default Option
- Opt to pay GST @ 18% with ITC – Voluntary Option, requires declaration
- Deadline to File Declaration: Last date to submit the declaration: 31st March 2025
Stand-Alone Restaurants (Not in hotel premises)
- GST Rate: 5%
- ITC Availability: ⌠No ITC
- E-Commerce (e.g., Swiggy/Zomato):
- Section 9(5) applies.
- ECO is deemed supplier and liable to pay tax.
Restaurants Located Within Hotel Premises :
The GST treatment now depends on whether the hotel is classified as a Specified Premise, based on actual room tariff in the preceding financial year.
A. Specified Premises
- (Room Tariff > INR 7,500 per day/unit in the previous FY)
- GST Rate: 18%
- ITC Availability: ✅ Available
- E-Commerce (ECO):
- Section 9(5) does NOT apply
- ECO must collect TCS, not pay tax as supplier
- Mandatory application of 18% GST on restaurant services.
- Example: Restaurants in hotels like Taj, Oberoi, Leela etc., where room tariffs exceed ₹7,500.
B. Non-Specified Premises
- (Room Tariff ≤ INR 7,500 per day/unit in the previous FY)
- Default GST Rate: 5%
- ITC Availability: ⌠No ITC
- E-Commerce (ECO):
- Section 9(5) applies – ECO is deemed supplier.
Option to Choose 18% GST with ITC
By filing Annexure VII (existing registrations) or Annexure VIII (new registrations) by 31st March 2025, restaurants can opt in to pay 18% GST with ITC. Once opted in, it applies for the current and subsequent financial years unless opted out (Annexure IX). Example: Budget hotels, motels, and guesthouses.
Filing of Opt-In/Opt-Out Declarations (Deadline: 31st March 2025)
These declarations are linked to whether a hotel premises is to be treated as a ‘Specified Premises’ (i.e., hotel room tariff > ₹7,500/day in the previous FY) for the purpose of GST on restaurant services. Declaration Forms Introduced: ANNEXURES – Purpose & Applicability
|
Annexure |
Title |
To be Filed By |
Purpose |
|---|---|---|---|
|
Annexure VII |
Opt-In Declaration for Registered Person |
Existing GST-registered persons |
To declare a hotel premise as ‘Specified Premises’, enabling 18% GST with ITC |
|
Annexure VIII |
Opt-In Declaration for Person Applying for Registration |
Persons applying for fresh GST registration |
To declare the hotel as ‘Specified Premises’ from the start |
|
Annexure IX |
Opt-Out Declaration |
Existing GST-registered persons |
To revert back and declare the premise as non-specified, i.e., attract 5% GST without ITC |
Important Conditions for Filing
- Annexure VII (Opt-In) and Annexure IX (Opt-Out):
- Must be filed for each premise separately
- Filing window: On or after 1st January and on or before 31st March of the preceding Financial Year
- Valid for the upcoming financial year and onward
- Annexure VIII (for new registrations):
- To be filed at the time of GST registration
- Also filed separately for each premise
- Forms are not yet live on the GST portal. Until then, submit manually or via registered email to the jurisdictional officer.
In Summary Takeaways
Understanding “Specified” Premises”—Key Shift from April 1, 2025
|
Criteria |
Before April 1, 2025 |
After April 1, 2025 |
|---|---|---|
|
Tariff Basis |
Real-time, room sold during the year |
Based on preceding FY's actual tariff |
|
Uncertainty |
Frequent mid-year tax rate changes |
✅ Eliminated |
|
Example Problem |
INR 8,000 room sold on 31-Mar triggers 18% from 1-Apr retroactively |
⌠No more retroactive impact |
Clarity + Compliance Ease: Hotels now know at the start of the FY what GST rate applies to restaurant services. This is a one-time declaration — no need to repeat every year unless opting out later. It's a one-time declaration—no need to file annually. Once filed, applicable for the current and all future financial years, unless opted out. Until the forms are made live on the GST portal Submit the declaration manually or via registered email to the jurisdictional GST officer
