Every restaurant owner in India prints GST on their bills, but a surprising number are not sure what the numbers mean or whether their invoice would pass an audit. This article explains the moving parts in plain language and shows what a correct bill looks like. It is general guidance – confirm the rates that apply to your specific format with your chartered accountant, because notifications change.
The basic idea
GST is a single tax charged on the supply of food and beverages as a service. On an intra-state bill (restaurant and customer in the same state, which is almost always the case) it is shown as two equal halves: CGST (central) and SGST (state). On the rare inter-state supply – for example a registered business customer from another state ordering catering – it is shown as a single IGST line instead.
So a bill at 5% GST shows CGST 2.5% + SGST 2.5%. The customer pays 5% in total.
Which rate applies to a restaurant?
The broad structure that has applied to restaurant services for several years is:
- Standalone restaurants, cafés, QSRs, cloud kitchens, canteens, food trucks – a concessional rate (5% at the time of writing) without input tax credit (ITC). You cannot claim back the GST you paid on ingredients, rent or equipment.
- Restaurants inside hotels where room tariffs cross a threshold – a higher rate (18%) with ITC.
- Outdoor catering and some event formats – treated differently again.
- Packaged items sold over the counter (bottled drinks, branded snacks, mineral water) are goods, not restaurant service, and carry their own rates.
The practical consequence: most standalone restaurants charge 5% and cannot claim ITC, which is why your purchase GST is simply a cost. Hotel restaurants, and anyone selling packaged goods alongside food, need item-level rates – and billing software that supports them.
Rates and thresholds are set by GST Council notifications and have changed before. Treat the numbers here as illustrative and verify the current rate for your format.
Inclusive vs exclusive pricing
Indian menus almost always show tax-inclusive prices: a ₹200 biryani costs the customer ₹200. The bill must still show the tax portion, which is back-calculated:
- Taxable value = 200 ÷ 1.05 = ₹190.48
- CGST 2.5% = ₹4.76, SGST 2.5% = ₹4.76
- Total = ₹200.00
Some restaurants price exclusive and add tax on top: ₹200 + ₹10 = ₹210. Either is allowed; what matters is that the menu and the bill agree and the software computes it consistently. Mixing the two – inclusive on the menu, added again at the counter – is the most common reason for customer complaints and for collecting the wrong amount.
What a compliant restaurant tax invoice shows
At minimum a GST tax invoice from a restaurant should carry:
- Your trade name, address and GSTIN
- A consecutive invoice number and the date
- Item-wise description, quantity and value
- Taxable value, the rate and the CGST/SGST (or IGST) amounts shown separately
- Total amount in figures
- For B2B customers who ask: their name and GSTIN so they can record the expense
Service charge, if you add one, is shown as a separate line and is itself subject to GST. It must be clearly optional in line with consumer-protection guidelines.
Example bill
| Item | Qty | Amount |
|---|---|---|
| Kerala Meals | 2 | ₹240.00 |
| Chicken Biryani | 1 | ₹180.00 |
| Sulaimani | 2 | ₹50.00 |
| Subtotal (taxable value) | ₹470.00 | |
| CGST 2.5% | ₹11.75 | |
| SGST 2.5% | ₹11.75 | |
| Total | ₹493.50 |
This is an exclusive-price example; an inclusive menu would show the same lines with the taxable value back-calculated.
Common mistakes we see on restaurant bills
- GSTIN missing or printed with a typo – the bill is then not a valid tax invoice.
- Tax shown as a single "GST 5%" line instead of CGST and SGST halves.
- Charging 5% on bottled water or packaged snacks that should carry the goods rate, or vice versa.
- Different totals on the KOT, bill and payment because the tax was applied twice.
- Invoice numbers that restart every day from a separate app, making reconciliation painful.
What your billing software should do for you
A good restaurant POS removes the arithmetic entirely:
- Your GSTIN on every bill automatically, with a continuous invoice series.
- Rate per item and per order type, so a hotel restaurant, a bakery counter and a packaged-goods shelf can coexist on one menu.
- Inclusive or exclusive pricing chosen once, applied everywhere – menu, QR ordering page, bill and reports.
- A tax summary report by date range that your CA can file from, and item-wise sales so you can answer an audit query in minutes.
MealNix does all of the above out of the box, including GSTIN on thermal receipts and tax reports exportable to Excel, so the only GST decision you make is the rate your CA confirms.
Restaurant in Kerala? MealNix also offers GST return filing for restaurants in Kerala – GSTR-1, GSTR-3B, annual returns and reconciliation with your POS sales, for a fixed monthly fee.
FAQ
Is GST on restaurant food 5% or 18%?
Standalone restaurants, cafés and cloud kitchens generally charge the concessional 5% rate without input tax credit; restaurants inside hotels above the tariff threshold charge 18% with ITC. Packaged goods sold over the counter carry their own goods rates. Confirm the current rate for your format with your CA.
Can a restaurant claim input tax credit?
Restaurants charging the concessional 5% rate cannot claim ITC on purchases. Hotel restaurants on the 18% rate can. This is why many standalone restaurants treat purchase GST simply as a cost.
Does a small restaurant need to register for GST?
Registration depends on your annual turnover crossing the threshold that applies in your state, and on whether you sell through platforms such as Swiggy or Zomato, which have their own collection rules. Ask your CA; once registered, every bill must be a proper tax invoice.
How should GST appear on a restaurant bill?
As separate CGST and SGST lines (or a single IGST line for inter-state supply) with the rate and amount, under the taxable value, along with your GSTIN, a consecutive invoice number and the date.
