How Revised GST Regime is Stirring Up the F&B Industry

India’s Food & Beverage industry has long thrived on a mix of flavours, formats, and fast-paced innovation. From bustling street food stalls to high-end gourmet brands, the sector has witnessed tremendous growth in recent years. But one challenge that consistently left a sour aftertaste? The complex web of taxes under the Goods and Services Tax (GST) regime. So, is the revised GST regime going to make life easy for the industry?

What’s Cooking with GST?

In its latest move to simplify India’s indirect tax framework, the GST Council has streamlined food and beverage items into two key slabs:

• 5% GST for essentials and mass-consumed products
• 18% GST for premium and non-essential offerings

This revision aims to replace the earlier scattered rates (5%, 12%, and 18%) that often left business owners confused and battling classification disputes. The streamlined approach promises transparency, consistency, and better compliance—all essential ingredients for sustainable growth in a high-volume industry.

Simple recipe for Startups

Perhaps the biggest winners in this reform are F&B startups and emerging brands. In an ecosystem where price sensitivity drives customer acquisition and scalability, having a simplified tax structure offers newfound clarity in operations and strategy.

Simranjeet Singh, Director at CYK Hospitalities, who has advised several homegrown and international food chains, describes it as a breath of fresh air:

"The GST rationalisation represents an uplifting change for any startup or emerging brand in the F&B industry, as it promises an easier working life. Up until now, the multiplicity of tax slabs has posed serious troubles for young entrepreneurs to construct a transparent price structure, to remain in compliance, and to contend with such buying customers who are cost-conscious."

He further highlights how simplified slabs help startups make better product and pricing decisions:

"Two slabs with 5% for essentials and 18% for anything else enhance the clarity of choice when operating a new venture and deciding on product mix and expansion strategy. Cheaper products create demand for QSR concepts, cloud kitchens, and packaged foods, whereas premium concepts purchase on the higher slab."

A Treat for Established Brands

While startups stand to gain from lower compliance burdens, larger players benefit from operational consistency—especially those operating across multiple cities or in hybrid formats (e.g., dine-in plus delivery).

For Beamer Brands, the parent company of India’s popular burger chain Biggies Burger, the revised GST is a step in the right direction.

"At Beamer Brands, we see the revised GST regime as a progressive move towards simplifying taxation and ensuring greater uniformity in the F&B sector," says Madhu Kumar, Director, Beamer Brands (parent company of fast-growing QSR brand Biggies Burger and others). "While transitional adjustments are inevitable, the clarity and consistency this brings will help brands like ours streamline operations, strengthen compliance, and ultimately deliver better value to customers."

The GST revision, by offering a more unified framework, brings much-needed relief for many international F&B brands operating in India, that source premium ingredients—especially imported ones. These ingredients have become increasingly expensive due to currency fluctuations, rising freight costs, and earlier tax complications.

Vaibhav Kaushik, COO of Stellar Concepts, which operates global F&B giants like Chili’s, Cinnabon, Auntie Anne's and PAUL, notes the broader impact:

"The GST rationalisation is a welcome initiative. It will help balance out the ever-increasing cost of goods, especially imported items, which have become more expensive in recent years. Guests will also benefit from this move, as pricing will become more transparent and stable across brands."

Big Bite for Cloud Kitchens and QSRs

In a digital-first, delivery-driven food economy, cloud kitchens and QSRs (Quick Service Restaurants) are rapidly becoming the backbone of the industry. The revised GST framework seems tailor-made for their high-volume, value-focused model.

Under the previous system, navigating multiple tax brackets for ingredients, packaging, and finished goods created hurdles in inventory and invoicing. Now, with just two key slabs, operations are leaner and more scalable.

• Cloud kitchens can adjust menus more flexibly without facing reclassification risks.
• QSRs can price affordably while maintaining healthy margins—especially on high-demand items in the 5% slab.
• Packaged food brands can structure pricing with more certainty, boosting trust among cost-conscious consumers.

This structure also supports the industry’s move into Tier II and Tier III cities, where customer affordability is key and GST compliance knowledge is still growing.

A Recipe for Scalable Success

By demystifying the tax landscape, the revised GST regime creates a foundation where both passion and profitability can co-exist. Whether it’s a cloud kitchen in Bangalore, a burger chain in Mumbai, or a packaged snack startup in Ahmedabad, this appears to be a step in the right direction, providing clarity, establishing consistency, and infusing confidence in the journey ahead.