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Delhi · PracticalTax and GST compliance for Delhi restaurants and cafés
Restaurants in Delhi deal with GST at 5% without input tax credit, food-delivery apps paying GST on their behalf, liquor outside GST, and several licences. Here is a practical compliance guide for restaurants, cafés and cloud kitchens.
Restaurants are among the most regulated small businesses in Delhi – food safety, municipal licences, fire safety, GST and, for bars, excise. This guide focuses on tax and GST, with a quick licence checklist.
GST rates
| Supply | Rate | ITC |
|---|---|---|
| Restaurant / café / cloud kitchen (dine-in, takeaway, delivery) | 5% | Not allowed |
| Restaurant in "specified premises" (hotel with any room tariff above ₹7,500/day) | 18% | Allowed |
| Outdoor catering (events) | 5% without ITC, or 18% with ITC in specified premises/cases | As applicable |
| Supply of food through apps (Section 9(5)) | 5%, paid by the app | Not allowed |
| Liquor | Outside GST – Delhi VAT | — |
Food delivery apps
Since 1 January 2022, e-commerce operators pay GST on restaurant services supplied through them. The restaurant:
- does not charge GST on those orders;
- reports the turnover through apps in GSTR-1/3B as supplies on which tax is paid by the operator (Table 3.1.1 of GSTR-3B);
- still pays GST at 18% on the app's commission and fees (and cannot use ITC to offset its 5% output, as ITC is not allowed for 5% restaurants – the GST on commission becomes a cost).
Composition option
Restaurants (not serving alcohol) with turnover up to ₹1.5 crore can opt for composition at 5% of turnover. They issue bills of supply, cannot charge GST, and cannot claim ITC. The effective tax is similar to 5% regular, but the cost cannot be passed on as a separate line – compare carefully.
Income tax
- Presumptive taxation (44AD – Section 58) is available for turnover up to ₹2 crore (₹3 crore if cash receipts ≤ 5%) at 6%/8%; many restaurants have higher costs and may prefer actual books.
- Cash-heavy restaurants should track the 5% cash threshold.
- TDS on rent (above ₹50,000 a month), contractors (housekeeping, security) and professionals.
- Staff meals and food costs are allowable expenses.
Worked example
Example: "Café Brew", a café in Rohini District Centre, has annual sales of ₹1.2 crore: dine-in/takeaway ₹80 lakh and app orders ₹40 lakh. App commission averages 22% (₹8.8 lakh + 18% GST).
| Item | GST |
|---|---|
| Dine-in / takeaway @ 5% | ₹4,00,000 payable by café |
| App orders @ 5% | ₹2,00,000 paid by the apps (not by café) |
| GST on app commission @ 18% | ₹1,58,400 – cost (no ITC available against 5% output) |
| ITC on rent, equipment | Not available (5% without ITC) |
The café reports ₹40 lakh app turnover separately in GSTR-3B Table 3.1.1(ii) and pays only on direct sales.
Licence checklist (Delhi)
| Licence | Authority |
|---|---|
| FSSAI registration/licence | FSSAI (FoSCoS) |
| Health trade licence (eating house) | MCD |
| Shops & Establishment registration | Delhi Labour Department |
| Fire NOC (where seating/area thresholds apply) | Delhi Fire Service |
| Excise licence (for liquor) | Delhi Excise Department |
| Signage / music licences | As applicable |
| GST registration | GST portal |
Common mistakes
- Charging 18% GST in a standalone restaurant, or 5% with ITC claims.
- Paying GST again on app orders.
- Including liquor sales in GST turnover.
- No daily sales reconciliation between POS, cash, UPI and apps.
Key takeaway
Most Delhi restaurants pay 5% GST without ITC on direct sales, while apps pay GST on delivery orders. Keep POS, payment and app data reconciled and licences current. Our GST and accounting teams support restaurants and cafés across North and West Delhi.
Official references
Official sources to verify the current text, notifications and circulars:
- CBIC GST – CGST/IGST Acts, Rules, notifications and circulars ↗
- GST portal – returns, notices and advisories ↗
- GST Council – meeting recommendations ↗
- Income Tax Department – Acts, Rules, circulars and section mapping ↗
- Income-tax e-Filing portal ↗
- Department of Trade and Taxes, Govt of NCT of Delhi ↗
- FSSAI FoSCoS – food licences ↗
Frequently asked questions
What is the GST rate for restaurants?
Restaurant services are generally taxed at 5% without input tax credit. Restaurants in hotels with room tariff above ₹7,500 per day (specified premises) are taxed at 18% with ITC.
Who pays GST on orders through Zomato or Swiggy?
Under Section 9(5), the e-commerce operator collects and pays GST on restaurant services supplied through it. The restaurant does not charge GST again on those orders but must report them correctly.
Is GST charged on liquor bills?
No. Alcoholic liquor for human consumption is outside GST; Delhi VAT applies to liquor sales in licensed restaurants and bars.
Can a small restaurant opt for composition?
Yes, if turnover is up to ₹1.5 crore, at 5% (2.5% CGST + 2.5% SGST) of turnover, with no ITC and no collection of tax from customers.
Is service charge taxable?
Service charge, if levied, forms part of the value and is taxed at the same rate. Consumer guidelines restrict mandatory service charge.
Can a cloud kitchen opt for composition?
Yes, if turnover is within ₹1.5 crore and it does not serve alcohol, but orders through apps are taxed by the operator under Section 9(5).
Is GST charged on packing charges?
Packing charges billed to customers are part of the value of restaurant service and taxed at the same rate.
This article is general information on the law as on 10 November 2026, written for educational purposes. It is not professional advice for your case. Section numbers under the Income-tax Act, 2025 should be confirmed with the official section mapping on the Income Tax Department website before use in filings.
Have a tax, GST or business question?
Call, WhatsApp or email CA Dilbagh Singh and team, from Delhi, anywhere in India or abroad.