GST on Food Items in India

Food is a fundamental necessity, and its taxation is one of the most sensitive areas of public policy in India. When the Goods and Services Tax (GST) was launched, the goal was to keep basic food items tax-free or lightly taxed, while applying higher rates to luxury or processed food items. However, recent clarifications and amendments by the GST Council have changed how certain packaged foods and eating-out services are taxed. In this post, we provide an easy-to-understand breakdown of GST on food items in India.

GST on Groceries: Fresh vs Packaged Foods

The taxation of groceries depends largely on whether the items are pre-packaged and labeled, or sold loose.

1. Unpackaged and Loose Food Items (0% GST)

Basic raw food items sold loose without pre-packaging are completely exempt from GST. This is done to support local farmers and low-income households. Examples include:

• Fresh fruits and green vegetables.
• Loose grains like wheat, rice, pulses, and flour (atta).
• Fresh raw milk, curd, and paneer sold by local dairies in non-packaged form.
• Raw eggs, fresh meat, and fresh fish.

2. Pre-packaged and Labeled Food Items (5% GST)

If the same basic food items are pre-packaged and labeled under legal metrology guidelines, they attract a 5% GST rate. This includes:

• Pre-packaged branded rice, wheat flour (atta), pulses, and semolina (suji).
• Packaged dairy items like branded curd, lassi, buttermilk, and paneer.
• Packaged organic food products, honey, and jaggery.

GST Slabs for Restaurant Dining & Food Delivery

When you eat out or order food online, the GST rates vary depending on the type of establishment and whether they have liquor licenses.

1. Standalone Restaurants (5% GST)

Most local restaurants, cafes, dhabas, and sweet shops charge 5% GST on the food bill. However, these restaurants cannot claim Input Tax Credit (ITC) on the ingredients they purchase. This rate applies to both AC and non-AC standalone eateries.

2. Restaurant inside Luxury Hotels (18% GST)

Dining at a restaurant located inside a hotel where the room tariff exceeds ₹7,500 per night attracts an 18% GST rate. These establishments are eligible to claim Input Tax Credit.

3. Food Delivery Apps (5% GST)

When you order food online via platforms like Zomato or Swiggy, a 5% GST is applicable. The delivery apps collect this tax from consumers and pay it directly to the government on behalf of the restaurants.

GST Slabs on Packaged Snacks, Chocolates, and Sweets

Processed foods, snacks, and sweets fall into higher tax categories because they are not classified as raw essentials.

• Sweets (Mithai) & Namkeens: Sweet shop items and branded snacks like chips, namkeens, and bhujia attract a 5% GST rate.
• Chocolates & Wafers: Chocolates, cocoa-based products, and premium baked goods attract an 18% GST rate.
• Aerated Soft Drinks: Carbonated drinks, cold drinks, and energy drinks attract the highest slab of 28% GST, plus an additional 12% Compensation Cess, making the total tax 40%.

Conclusion

The GST Council maintains a balanced approach by keeping essential farm products tax-free while taxing processed items and eating out. Understanding these slabs helps you double-check your restaurant and grocery bills for accuracy. Next time you receive a bill, use our online GST calculator to ensure you are being billed under the correct tax slabs!