Yes, GST applies to tea and coffee served in hotels, with rates varying based on the hotel's luxury level. Generally, restaurants in hotels charge 5% GST (without Input Tax Credit) for mid-range, while those in 5-star or high-end hotels (room tariff ≥ ≥ ₹7,500) charge 18% GST (with Input Tax Credit).
GST on tea ranges from 0% to 5%, while coffee and spices attract 5% to 12% GST. Processed or packaged spices may attract a higher GST rate. Proper classification under the correct HSN code ensures compliance.
Generally GST-Free Beverages:
Tea leaves and tea bags. Instant coffee and coffee beans. Powdered drink mixes.
How is GST applied to restaurants inside hotels? If the hotel's room tariff is below ₹7,500, the restaurant is taxed at 5% (without ITC). If the hotel's room tariff is ₹7,500 or above, the restaurant attracts 18% GST (with ITC). This rule applies even if guests dine without staying at the hotel.
What is the GST rate on cold drinks? The cold drinks GST rate is 28% GST + 12% Compensation Cess, totaling 40% tax. Are fruit juices taxed at the same rate as cola? No.
GST on tea leaves is 0% if sold loose and unbranded, 5% if packaged. Branded green tea is taxed at 5%, like other packaged teas. Yes. The GST on herbal tea ranges from 5% to 18%, depending on ingredients and classification.
Is GST charged on hotel rooms? Yes. GST is levied at 5% for rooms up to Rs.7,500 and 18% for rooms above Rs.7,500.
To calculate GST on your hotel bill:
Unbranded and unpackaged food items such as cereals, pulses, and fresh vegetables are exempt from GST. In contrast, branded and packaged food products attract a 5% or 12% GST, depending on the item and branding status—impacting the applicable food GST rate.
Key Takeaways
The Indian Government has slashed the Goods and Services Tax (GST) rate on instant coffee from 18 per cent to five per cent following a review at the 56th GST Council meeting chaired by Finance Minister Nirmala Sitharaman.
The 50-state view for bulk, grocery-type coffee
Bulk coffee is not subject to a state sales tax. Local or meals-type taxes may still apply to prepared beverages. Example: New Hampshire has a Meals and Rooms tax on restaurant beverages.
Beverages that are GST-free
* Beverages specified in the third column of the table are GST - free. Tea, coffee etc.
Barista-Made Drinks: You must charge 10% GST on all hot and cold drinks prepared by your staff. This includes every coffee, tea, hot chocolate, and chai you sell.
The tax on tea had existed since the passing of the 1767 Townshend Revenue Act. Along with tea, the Townshend Revenue Act also taxed glass, lead, oil, paint, and paper. Due to boycotts and protests, the Townshend Revenue Act's taxes were repealed on all commodities except tea in 1770.
New GST Rate on Hotel Rooms (Effective September 22, 2025)
For rooms costing up to ₹7,500 per night, the GST is 12%. And for rooms that are priced above ₹7,500 per night, it is 18%.
Hotels, Motels, and Serviced Apartments
These are subject to 10% GST. Operators must issue tax invoices and include GST in the advertised prices. Even if you provide package deals (e.g., room plus breakfast), the entire amount is typically subject to GST unless individual components are GST-free.
Hotel fees are charges that guests may encounter in addition to the base room rate. These can include fees for amenities, add-on services, taxes, resort fees and incidental expenses.
Consumers of 40% gst items- “sin” goods: tobacco, pan masala, sugary drinks, premium beverages etc. will face higher GST.
What is the GST on coffee in India? It ranges from 0% to 18% depending on the type: Raw beans: 0% Roasted/ground coffee: 5%
Key items exempted from GST:
Stakeholders cheer as GST on instant coffee is reduced from 18% to 5%
GST Tax Rate: 12%