GST Billing Guide for Indian Restaurants: Rates, Rules, and Compliance

Understanding GST for Restaurants: The Fundamentals

The Goods and Services Tax (GST) replaced a patchwork of central and state taxes in 2017, and restaurant billing became significantly simpler -- at least in theory. In practice, many restaurant owners still struggle with the correct rates, invoice formats, and filing requirements.

This guide cuts through the confusion and gives you actionable, up-to-date information for 2026.

GST Rates: Which Rate Applies to Your Restaurant?

The 5% GST Rate (Without Input Tax Credit)

The majority of restaurants in India fall under the 5% GST bracket. This rate applies to:

• Restaurants without air conditioning (or where AC is not the primary feature of the dining area)
• Takeaway and delivery food from any restaurant
• Non-alcoholic food and beverage served in most standalone restaurants
• Outdoor catering services (without ITC)

The 5% is split as:

• CGST: 2.5%
• SGST: 2.5%

Important: Restaurants opting for the 5% rate cannot claim Input Tax Credit (ITC) on their purchases. This means you cannot offset the GST you pay on raw materials, rent, or equipment against the GST you collect from customers.

The 18% GST Rate (With Input Tax Credit)

The 18% rate applies to:

• Restaurants inside 5-star hotels (or hotels where room tariff exceeds Rs 7,500 per night)
• Outdoor catering services where the supplier opts for ITC
• Bundled services where food is part of a larger service package (banquet halls, event venues)

The 18% split:

• CGST: 9%
• SGST: 9%

Restaurants paying 18% GST can claim ITC on their inputs, which can offset a significant portion of the higher rate.

Which Rate Should You Choose?

For most standalone restaurants, the 5% rate without ITC is simpler and often works out cheaper. The 18% rate with ITC makes sense only if your input costs are very high (premium restaurants with expensive imported ingredients, for example).

Consult your chartered accountant before making this decision, as it depends on your specific cost structure.

GST Invoice Requirements

Every GST-compliant restaurant invoice must contain the following elements:

Mandatory Fields

Restaurant name and address

Restaurant GSTIN (15-digit alphanumeric code)

Invoice number (unique, sequential, no gaps -- e.g., INV-2026-0001)

Invoice date and time

Customer name (for B2B invoices above Rs 50,000; optional for B2C)

HSN code: 9963 for restaurant services

Description of supply: "Restaurant Service" or itemised list

Taxable value: The pre-tax total

Tax rate and amount: CGST and SGST shown separately

Total invoice value: Including taxes

Place of supply: State where the restaurant is located

B2C vs B2B Invoices

• B2C (Business to Consumer): Most restaurant bills. Customer GSTIN is not required. Simplified format is acceptable.
• B2B (Business to Business): When a company pays for a meal and needs ITC. Customer GSTIN must be captured, and the invoice must be in the full tax invoice format.

A good POS system should handle both formats. When the cashier enters a customer GSTIN, the invoice should automatically switch to the B2B format.

Sample Invoice Structure

``` RESTAURANT NAME Address Line 1, City, State - PIN GSTIN: 29XXXXXXXXXXXZX FSSAI: XXXXXXXXXXX

TAX INVOICE Invoice No: INV-2026-0142 Date: 14-Feb-2026 Time: 20:35

Item Qty Rate Amount ----------------------------------------- Butter Chicken 1 Rs 350 Rs 350 Garlic Naan 2 Rs 60 Rs 120 Dal Makhani 1 Rs 250 Rs 250 Lassi 2 Rs 80 Rs 160 ----------------------------------------- Subtotal Rs 880 CGST @ 2.5% Rs 22 SGST @ 2.5% Rs 22 ----------------------------------------- Grand Total Rs 924 ----------------------------------------- HSN: 9963 Thank you for dining with us! ```

HSN Code for Restaurant Services

The Harmonized System of Nomenclature (HSN) code for restaurant services is 9963. More specifically:

• 9963: Food and beverage serving services
• 99631: Services provided by restaurants, cafes, and similar eating facilities
• 99633: Catering services

For most restaurants, using 9963 on your invoices is sufficient. Your POS should have this pre-configured.

FSSAI Licence: The Other Compliance Requirement

While not directly related to GST, the FSSAI (Food Safety and Standards Authority of India) licence number must appear on your bills. This is a separate regulatory requirement.

Types of FSSAI Licences

| Type | Annual Turnover | Validity | |------|----------------|----------| | Basic Registration | Up to Rs 12 lakh | 1-5 years | | State Licence | Rs 12 lakh - Rs 20 crore | 1-5 years | | Central Licence | Above Rs 20 crore | 1-5 years |

Your POS system should allow you to configure your FSSAI number so it prints on every bill automatically.

Common GST Mistakes Restaurants Make

1. Charging the Wrong Rate

Some restaurants charge 18% when they should charge 5%, or vice versa. Double-check your classification. If you are a standalone restaurant not inside a 5-star hotel, you almost certainly fall under 5%.

2. Not Splitting CGST and SGST

Showing a single line item "GST: 5%" is not compliant. You must show CGST (2.5%) and SGST (2.5%) as separate line items on the invoice.

3. Charging GST on Service Charge

Service charge is optional and at the customer's discretion. If you levy it, GST applies on the amount inclusive of service charge. For example:

• Food total: Rs 1,000
• Service charge (10%): Rs 100
• Taxable value: Rs 1,100
• CGST (2.5%): Rs 27.50
• SGST (2.5%): Rs 27.50
• Grand total: Rs 1,155

4. Incorrect Invoice Numbering

Invoice numbers must be sequential with no gaps within a financial year. "INV-001, INV-003" (skipping 002) is non-compliant. Your POS should auto-generate these to avoid manual errors.

5. Not Filing GSTR-1 on Time

GSTR-1 (outward supply return) must be filed monthly (by the 11th of the following month) or quarterly if you opted for the QRMP scheme. Your POS should generate data exports that simplify this filing.

6. Not Tracking Zero-Rated or Exempt Supplies

Some items may be exempt from GST (e.g., plain drinking water served free). Ensure your POS correctly categorises these as exempt rather than taxable.

How a POS System Simplifies GST Compliance

A properly configured POS system eliminates most manual GST compliance work:

Automatic Tax Calculation

Configure your GST rate once (5% or 18%), and every bill automatically calculates the correct CGST and SGST amounts. No manual math, no errors.

Compliant Invoice Generation

The POS generates invoices with all mandatory fields: GSTIN, HSN code, sequential invoice number, separated CGST/SGST, and FSSAI number. Every single bill is compliant by default.

GST Report Generation

At the end of the month (or quarter), your POS should generate:

• Sales summary by tax rate: Total sales at 5% and 18% (if applicable)
• CGST and SGST collected: Exact amounts for filing
• B2B invoice register: For GSTR-1 B2B section
• HSN-wise summary: For GSTR-1 HSN table

ParcelPOS, for example, allows you to configure GST rates per outlet and automatically generates compliant invoices with correct CGST/SGST split, sequential numbering, and exportable tax reports.

Audit Trail

Every invoice, every void, every discount is logged with timestamps and user IDs. If the tax authorities audit your restaurant, you have a complete digital trail.

Packaging and Delivery Charges

If you charge for delivery or packaging, these charges are also subject to GST at the same rate as the food. For example:

• Food items: Rs 500
• Packaging charge: Rs 30
• Delivery charge: Rs 50
• Taxable value: Rs 580
• CGST (2.5%): Rs 14.50
• SGST (2.5%): Rs 14.50
• Total: Rs 609

Your POS should include these charges in the taxable value automatically.

Composition Scheme for Small Restaurants

Restaurants with annual turnover below Rs 1.5 crore can opt for the Composition Scheme:

• Tax rate: 5% (effectively 1% CGST + 1% SGST, but billed as a consolidated 5% to customers -- note: composition dealers pay 5% on turnover, not on individual bills)
• Simplified filing: Quarterly returns instead of monthly
• No ITC: Cannot claim input tax credit
• No inter-state supply: Cannot serve customers from other states (relevant for catering)

Important: Composition scheme restaurants cannot collect GST from customers. They pay a flat rate on their turnover. The invoice must clearly state "Composition taxable person, not eligible to collect tax on supplies."

Your POS needs to support this mode if you are under the composition scheme.

Practical Steps to Ensure Compliance

Get your GSTIN if you do not have one yet (mandatory if turnover exceeds Rs 20 lakh, or Rs 10 lakh in special category states).

Configure your POS with GSTIN, FSSAI number, correct tax rate, and HSN code.

Train your staff to enter orders correctly and issue proper invoices for every transaction.

Generate monthly/quarterly reports from your POS for GSTR-1 filing.

Keep digital records for at least 6 years as required by GST law.

Review your setup annually to ensure compliance with any rule changes.

Conclusion

GST compliance for restaurants is straightforward once you understand the rules and have the right tools. The correct rate (5% or 18%), properly formatted invoices with CGST/SGST split, sequential numbering, and regular filing -- that is essentially the entire checklist.

A well-configured POS system automates the vast majority of this. You should not be calculating tax manually or formatting invoices by hand in 2026. Let technology handle the compliance so you can focus on what matters: serving great food.