GST walks into your restaurant every single day — on every bill you print, every invoice you raise, and every return you file. And yet, for most restaurant owners in India, it remains a source of confusion, anxiety, and costly mistakes.
Since GST replaced the old VAT and service tax regime in July 2017, the rules have been updated, reversed, and refined multiple times. Many restaurant owners are still applying rates that were changed three years ago. Some are charging the wrong tax slab. Others are generating invoices that are technically non-compliant — a risk that could invite notices from the GST department.
This guide is written specifically for restaurant owners, not accountants. We explain GST for restaurants in plain language: what rates apply to you, the difference between CGST and SGST, what your invoice must legally contain, the most common mistakes restaurants make, and how modern billing software eliminates all of this friction automatically.
GST Basics for Restaurant Owners
What Is GST for Restaurants?
Goods and Services Tax (GST) is a single, unified tax that replaced the old maze of VAT, service tax, octroi, and entry tax in India. For restaurants, GST applies to the food and beverages you serve — whether dine-in, takeaway, or delivery.
The key thing to understand is that restaurants are taxed as service providers, not goods sellers. This means your bills use SAC (Service Accounting Codes) rather than HSN codes — more on this below. The GST you collect from customers goes to the government, minus any eligible credits.
When Does GST Registration Become Mandatory?
If your restaurant's annual turnover exceeds ₹20 lakhs (₹10 lakhs in North-Eastern and special category states), you must register for GST. Below this threshold, registration is voluntary but strongly recommended — many aggregators and corporate clients require a GSTIN before doing business.
CGST vs SGST vs IGST — Explained Simply
GST is split between the central government and state governments. Here is how the split works:
In practice, for almost every restaurant transaction in India, you will charge CGST + SGST (not IGST) because the customer is physically present in your restaurant in the same state. A 5% GST bill, for example, means 2.5% CGST + 2.5% SGST. The customer pays 5% total — it just gets split between two governments on your return.
IGST only comes into play for inter-state services — for example, if you cater an event in a different state from where your business is registered, or if your cloud kitchen delivers across state borders.
GST Rates for Restaurants in India (2026)
The most important thing to understand: the 5% rate applies to almost all restaurants in India, regardless of whether they are air-conditioned. The old rule that charged 12% for AC restaurants and 5% for non-AC restaurants was abolished in 2019. Do not apply the old rates — this is one of the most common mistakes restaurant owners still make.
Alcohol is a separate matter. Alcohol is outside the GST net and taxed by state excise departments. Your food bill carries GST; alcohol is typically taxed separately as per state policy. Most billing software (including CurryIQ) handles this split automatically.
The Composition Scheme for Small Restaurants
If your restaurant's annual turnover is below ₹1.5 crore, you can opt for the Composition Scheme. Under this scheme, you pay a flat 5% GST on your total turnover — no complex invoice requirements, no ITC, and quarterly return filing instead of monthly.
The trade-off: you cannot charge GST separately on your customer bills (it's absorbed into your price), and you cannot issue a regular GST tax invoice — only a "bill of supply." This makes the composition scheme attractive for small restaurants, dhabas, and cafés where customers do not ask for a GST invoice for their own business claims.
SAC Codes for Restaurants — What They Are and Which Apply
A common point of confusion: restaurants use SAC codes (Service Accounting Codes), not HSN codes. HSN codes apply to goods; SAC codes apply to services. Since restaurants are providing a service (the experience of eating food), they use SAC codes on their invoices.
For most restaurants, SAC 996331 is the code you will use on every invoice. CurryIQ automatically applies the correct SAC code to all restaurant invoices — you do not need to look it up or enter it manually.
What a GST-Compliant Restaurant Invoice Must Include
A GST invoice is a legal document. If it is missing any required field, it is technically non-compliant — and your customer cannot claim ITC on it (for B2B transactions). Here is exactly what must appear on every GST invoice your restaurant issues:
Your GSTIN
Your 15-digit GST registration number — mandatory on every invoice.
Restaurant name and address
Must match your GST registration exactly.
Invoice number
Must be sequential, unique, and cannot be reused or skipped.
Date of invoice
The date the service was provided (typically today's date).
Customer name and address
For B2B: also include customer GSTIN. For B2C above ₹2.5 lakh: full customer details required.
SAC code
Service Accounting Code — 996331 for most restaurants.
Item description and quantity
Each food item, beverage, or service line itemised.
Taxable value
The amount before tax is applied.
CGST and SGST amounts separately
e.g., CGST 2.5% = ₹X, SGST 2.5% = ₹Y. Never lump them together.
Total invoice value
Taxable value + CGST + SGST (+ any other charges).
Place of supply
The state where the service is provided — typically your restaurant's state.
5 Common GST Mistakes Restaurants Make
These are the mistakes we see most often — and each one can trigger a GST notice or penalty.
Applying the old 12% AC / 5% non-AC split
This rule was abolished in 2019. All standalone restaurants now charge 5% regardless of AC or non-AC. Restaurants still applying 12% to AC customers are overcharging and creating liability.
Not separating CGST and SGST on the invoice
Writing "GST 5%" as a single line is non-compliant. The invoice must show CGST 2.5% and SGST 2.5% as separate line items. B2B customers cannot claim ITC on a non-compliant invoice.
Using HSN codes instead of SAC codes
Restaurants provide services, not goods. Using an HSN code (meant for manufactured goods) on a service invoice is incorrect. The correct code is SAC 996331.
Skipping or reusing invoice numbers
GST law requires sequential, non-repeating invoice numbers within a financial year. Skipping numbers or reusing them (common in manual systems) is a compliance violation.
Not collecting GSTIN for B2B customers
When another business pays your restaurant bill and wants to claim ITC, they need their GSTIN on the invoice. Not collecting this and issuing a B2C invoice instead means your customer loses their ITC — creating disputes and bad will.
How CurryIQ Automates GST Billing for Restaurants
The honest truth is that manually managing GST billing — split rates, sequential invoice numbers, SAC codes, CGST/SGST breakdowns — is error-prone when done by hand or with a basic billing app. CurryIQ eliminates all of this friction by building GST compliance into every step of the billing workflow.
Auto CGST + SGST Split
Every bill automatically splits the tax into the correct CGST and SGST amounts. You set your GST slab once; CurryIQ handles the math on every transaction.
GST-Compliant Invoices Instantly
Every invoice includes your GSTIN, SAC code, sequential invoice number, itemised tax breakdown, and place of supply — in the correct legal format.
SAC Code Management
Set SAC codes once at the menu level. CurryIQ applies them automatically to every relevant line item — no manual lookup needed.
Filing-Ready GST Reports
Pull GSTR-1 compatible sales reports, tax collected summaries, and month-wise breakdowns directly from the analytics dashboard — ready for your CA to file.
Multi-Rate Support
Running a hotel restaurant at 18%? A takeaway counter at 5%? CurryIQ supports multiple GST rates in the same property — each outlet billed correctly.
Composition Scheme Mode
If you're on the composition scheme, CurryIQ switches to "bill of supply" mode and stops showing tax separately on customer bills — fully compliant.
What CurryIQ customers say about GST billing
"Before CurryIQ, we had to manually calculate CGST and SGST on every bill. Now it's automatic. Our accountant said our GST data has never been cleaner."
— Restaurant owner, Chandigarh
Frequently Asked Questions
What is the GST rate for restaurants in India?
Most standalone restaurants in India pay GST at 5% (no input tax credit). Restaurants located inside hotels where the room tariff exceeds ₹7,500 per night charge 18% GST with ITC. Restaurants opting for the composition scheme pay a flat 5% with no ITC. Alcohol served in restaurants attracts state excise duty separately from GST on food.
What is the HSN code for restaurant services in India?
Restaurant services use SAC (Service Accounting Code) rather than HSN codes since they are services, not goods. The SAC code for restaurant services is 996331 (restaurant services with or without AC). Outdoor catering uses SAC 996334. Cloud kitchens and delivery-only restaurants also use 996331.
Do restaurants need to register for GST in India?
Yes, if your restaurant's annual turnover exceeds ₹20 lakhs (₹10 lakhs in special category states), GST registration is mandatory. Below this threshold, registration is optional but recommended for credibility. Once registered, you must issue GST-compliant invoices for every transaction and file monthly or quarterly returns.
What details must a GST invoice from a restaurant include?
A valid GST restaurant invoice must include: (1) GSTIN of the restaurant, (2) sequential invoice number, (3) date of issue, (4) name and address of the restaurant, (5) SAC code (996331 for restaurant services), (6) description of items served, (7) taxable value, (8) CGST and SGST amounts separately (or IGST for interstate), (9) total invoice value, and (10) place of supply.
Can I claim input tax credit (ITC) as a restaurant owner?
No, most restaurant owners cannot claim ITC under the standard 5% GST rate for standalone restaurants. The 5% rate comes without ITC eligibility — meaning you cannot offset the GST you pay on ingredients, equipment, or packaging against your GST liability. Only restaurants in hotels with room tariff above ₹7,500, paying 18% GST, can claim ITC.
Conclusion
GST billing for restaurants is not complicated once you understand the rules — but it is unforgiving when you get it wrong. A non-compliant invoice, the wrong tax rate, or a missed sequential number can create headaches that far outweigh the effort of getting it right from the start.
The good news is that you do not need to memorise tax laws or manually calculate splits. The right billing software handles all of it — automatically, on every transaction, for every table and every order.
CurryIQ was built specifically for Indian restaurants. It knows the correct GST rates, SAC codes, invoice requirements, and filing formats so you do not have to think about them. Your focus stays on running a great restaurant, not on tax compliance.
Stop worrying about GST. Let CurryIQ handle it.
GST-compliant invoices, correct SAC codes, and filing-ready reports — automatically, on every bill.
Start free trial — ₹999/month