You Can Save More While Dining Out. How? What the New GST Rules and Credit Card Offers Mean for You

In 2025, the Indian government implemented a major overhaul of the Goods and Services Tax (GST) structure, significantly lowering the tax on eating out. For millions of consumers who dine out regularly, this change is a welcome relief at a time when discretionary spending is on the rise. 

Under the new regime, most standalone restaurants and food courts now charge a uniform 5% GST on dining, a sharp drop from the previous 12–18% range that varied by establishment type.

At the same time, banks and fintech companies have bolstered their credit-card dining reward programmes, enabling consumers to stack tax savings with discounts, cashback and reward points on restaurant bills.

This dual-benefit paradigm, lower taxation plus financial incentives, has translated into potential annual savings of thousands of rupees for regular diners.

Why Was the GST on Dining Was Reduced and What Changed?

Before September 22, 2025, restaurant services in India were taxed at 12% (for non-AC restaurants) or 18% (for AC restaurants and hotels). Under the GST 2.0 reforms, these multiple slabs were simplified, with most standalone restaurants, food courts and takeaway outlets now subject to a flat 5% GST without Input Tax Credit (ITC).

GST Rates on Dining Services (Before & After Reforms)

Here’s how the applicable GST on restaurant dining changed with the 2025 tax reform:
 

Restaurants inside hotels with room tariffs above ₹7,500 per night continue to levy 18% GST on dining services, but they can claim ITC, unlike standalone eateries charging 5%.

The simplified GST structure has made dining out more affordable for the majority of consumers by sharply cutting the effective tax on restaurant bills. However, high-end hotel restaurants have kept the higher tax rate due to ITC eligibility and classification rules.

How Credit Cards Amplify Your Dining Savings

While reduced GST makes eating out cheaper in absolute terms, credit-card offers can further enhance savings, especially if you pay your restaurant bills using cards with dining rewards.

Banks and fintech players now provide a range of benefits such as instant discounts, cashback, bonus reward points, and buy-one-get-one (BOGO) deals on dining. Popular examples include:

• 10–25% instant dining discounts at partner restaurants
• 5–10× reward points on dining spends
• 5–15% cashback on select spends

For instance, cards like the HDFC Freedom or IndusInd EazyDiner credit cards offer rewards when used at partnered eateries or through dining aggregators.

Table 2: Typical Dining Benefits on Popular Credit Cards

Below is a snapshot of what some credit cards offer for dining spends:
 

Using a credit card that aligns with your dining habits can significantly lower your effective cost per meal, especially when tax savings and offers are stacked. This makes quality dining more affordable for many urban consumers.

What This Means for Consumers and Restaurants

The combined effect of lower GST and strategic credit-card incentives is tangible. People who previously spent ₹2,000–₹5,000 monthly on dining may now save upwards of ₹500 per month in taxes alone, before factoring in card-based rewards. Over a year, these savings can add up to ₹3,000–₹8,000 or more.

Restaurants are also seeing positive spillovers. With more affordable dining costs and higher UPI and card-based payments reported this year, many outlets are anticipating stronger footfalls during festive periods and everyday dining alike. Recent data shows a 34% rise in UPI dining payments compared with the previous year, a sign of increased consumer engagement.

Yet there are trade-offs. Standalone restaurants at 5% GST cannot claim ITC, meaning the tax relief does not reduce their input costs directly, which some in the industry argue could create embedded cost challenges over time.

Practical Tips to Maximise Your Dining Discounts

To make the most of these opportunities:

1. Choose restaurants with 5% GST: Standalone outlets and food courts typically fall into the lower tax category.
2. Check your credit card offers before paying: Most reward and discount offers are dynamic and may have monthly caps or minimum spend requirements.
3. Combine tax savings with card offers: You can usually use one card offer per transaction but stack that with GST savings for higher net benefit.
4. Use dining aggregators: Platforms like Dineout and Swiggy often integrate credit-card partner offers.

Conclusion

The 2025 GST reforms that set a 5% tax on most dining bills have made eating out materially cheaper for the average Indian consumer. When paired with the right credit-card rewards and discounts, these savings can be amplified significantly. 

Restaurants are seeing improved consumer engagement as discretionary spending on leisure rises, and digital payment data shows increased UPI transactions in the hospitality sector.

However, consumers should stay mindful of offer limits, tax slab exceptions (such as luxury hotel restaurants at 18% GST), and expiry or usage caps on card offers. Armed with the right strategy, choosing lower-tax venues and aligning credit-card perks, diners can enjoy both superb meals and smarter savings in 2025 and beyond.

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LoansJagat Team

‘Simplify Finance for Everyone.’ This is the common goal of our team, as we try to explain any topic with relatable examples. From personal to business finance, managing EMIs to becoming debt-free, we do extensive research on each and every parameter, so you don’t have to. Scroll up and have a look at what 15+ years of experience in the BFSI sector looks like.