GST for Restaurants: Regular vs Composition Scheme

Restaurant owners often face confusion when choosing between regular GST registration and the composition scheme. Both have distinct advantages, and your choice depends on factors like turnover, supplier base, and customer type.

What is Regular GST Registration?

Under regular GST, you charge 5% GST on food (dine-in and takeaway) and file quarterly returns. The key benefit is Input Tax Credit (ITC) — you claim back GST paid on supplies like ingredients, equipment, and utilities.

• Works best if your annual turnover exceeds ₹40 lakh (₹20 lakh for services)
• Requires detailed record-keeping and monthly compliance
• Suitable if you purchase high-value supplies with GST invoices
• Mandatory for B2B catering contracts

The Composition Scheme Advantage

Composition GST is a simpler, lower-tax option for smaller restaurants. You pay 5% flat GST on turnover without claiming ITC. No need to file quarterly returns — only annual filings are required.

• Annual turnover limit: ₹40 lakh (goods); ₹20 lakh (services); ₹10 lakh (special-category states like Jammu & Kashmir)
• Fixed 5% tax rate on total turnover
• Minimal record-keeping and compliance burden
• Ideal for standalone cafés, food stalls, and small eateries

Which Scheme Suits Your Restaurant?

Choose composition if:

• Your annual turnover is below the threshold
• You operate a small, neighbourhood restaurant
• You prefer simpler compliance and lower GST outgo

Choose regular if:

• Your turnover exceeds ₹40 lakh
• You supply bulk catering or B2B contracts
• You incur significant GST-recoverable expenses

The wrong choice can cost you money. Many restaurant owners overpay tax by staying on regular registration when composition suits them better — or vice versa.

Ready to find the best GST scheme for your restaurant? Use our free GST compliance calculator at gsthelp.in to calculate your exact tax liability under both schemes and make an informed decision today.