Since the Goods and Services Tax (GST) rolled out in India, one of the most common queries from business owners has been: “If I get a GST bill from a restaurant, can I claim input tax credit (ITC)?” The answer isn’t as straightforward as many assume, and it depends heavily on your type of business and how you use that expense.
The Rule: ITC on Restaurant Bills is Mostly Blocked
Under Section 17(5) of the CGST Act, ITC on food, beverages, and restaurant expenses is blocked unless you are in the food service or hospitality industry yourself. That means most businesses cannot use restaurant bills to reduce their GST liability.
For example, if an IT company hosts a team lunch at a restaurant and gets a GST invoice, they still cannot claim ITC. These expenses are treated as personal consumption or non-business-related, even if technically done for clients or staff.
When Can ITC on Restaurant Bills Be Claimed?
There are limited but important scenarios where you can claim ITC:
- Caterers and food businesses: If you run a catering service, cloud kitchen, or hotel that provides food as part of taxable outward supplies, restaurant bills used for business inputs can qualify.
- Re-selling or bundling food services: For instance, if a wedding planner includes meals in their package and sources them from a restaurant, ITC can be claimed because it directly contributes to taxable supply.
- Employee meals as statutory requirement: In rare cases where labor laws require employers to provide meals (e.g., in factories), ITC eligibility may apply if supported by compliance.
Why Most Businesses Can’t Claim ITC on Restaurant Bills
The government’s reasoning is simple: to avoid misuse. If all businesses started claiming restaurant bills as business expenses, the scope for ITC fraud would skyrocket. By blocking ITC, the GST framework keeps restaurant and hospitality expenses outside the chain of credits—except for businesses directly engaged in food services.
What Businesses Should Do Instead
- Classify expenses properly: Don’t wrongly claim ITC on restaurant invoices unless your business is eligible.
- Negotiate contracts smartly: If you frequently host client meetings at hotels or restaurants, see if the venue can bill it under “conference packages” instead of pure food bills—sometimes that changes ITC eligibility.
- Consult your GST advisor: Edge cases vary, and compliance depends on how the expense is recorded in your books.
The Bottom Line
So, if you’re asking: “Can I claim ITC on a restaurant GST bill?” — the answer is usually no. Only businesses in the food, catering, or hospitality space get that benefit. For most other sectors, restaurant expenses remain blocked credits.
