GST on Restaurant Bills in India: A Guide
Most standalone restaurants in India charge GST at 5% on food, without input tax credit. Restaurants inside hotels above a room-tariff threshold are taxed differently. The rate applies to the amount after discount, not before, and the bill has to show the tax separately from the taxable value.
Which rate applies to you
Rates are set by notification and do change, so treat the table below as the shape of the answer and confirm the current figures with your accountant.
| Standalone restaurant, dine-in or takeaway | 5% without input tax credit |
|---|---|
| Restaurant inside a hotel above the specified room-tariff threshold | 18% with input tax credit |
| Outdoor catering | Treated separately |
| Packaged goods sold as-is | The rate applicable to that product, not the restaurant rate |
The practical consequence of 5% without input tax credit is that GST paid on your purchases is not recoverable. It is a cost, not a credit, and it belongs in your margin calculation rather than being treated as pass-through.
What has to be on the bill
A tax invoice from a registered restaurant has to identify the supplier, the supply, and the tax charged. In practice that means:
- Your restaurant name, address and GSTIN
- An invoice number from a consecutive series, and the date
- Each item with quantity and rate
- The taxable value, after any discount
- CGST and SGST shown separately, each at half the total rate, for a sale within your state
- The total payable
The phrase that matters is consecutive series. Numbers with gaps you cannot explain, or worse a number that appears twice, is the first thing that attracts a question at audit.
Discount before tax, not after
This is the single commonest arithmetic mistake on a restaurant bill.
A discount agreed at the time of supply reduces the taxable value. Tax is then calculated on the reduced amount. Applying the discount after tax produces a smaller-looking total but an incorrect tax figure, and the tax figure is the one that gets reconciled against your returns.
| Correct: discount then tax | 1,000 − 100 = 900 taxable; tax 45; total ₹945 |
|---|---|
| Wrong: tax then discount | 1,000 + 50 = 1,050; less 105; total ₹945 |
| Why it matters | Both total ₹945, but the second reports ₹50 of tax on a ₹900 supply |
The totals can coincide. The reported tax does not, and that is what your return carries.
Bill numbering, and why it gets restaurants into trouble
A consecutive series sounds trivial until a Saturday evening.
A second billing counter opens and starts its own count. A cancelled bill has its number handed to the next customer. Somebody reopens the billing app and the day restarts at one. None of that is dishonest, and all of it produces a sequence that cannot be explained a year later.
The structural fix is that the number must not be generated by whichever device happens to print it. In Scan2Plate billing the number is allocated centrally inside a database transaction, two counters billing simultaneously cannot collide, a cancelled bill retires its number rather than reissuing it, and the counter belongs to the business day rather than the browser session.
Composition scheme, and whether it applies to you
Some small restaurants opt for the composition scheme, which trades a lower rate and simpler returns for restrictions.
Under it you cannot collect tax from customers as a separate line, cannot claim input credit, and must display that you are a composition taxable person. Turnover limits apply and are set by notification.
Whether it is worth it depends on your turnover, your input costs and how much of your trade is with businesses who want a tax invoice. It is a question for your accountant rather than for software, but it changes what your bill must say, so the decision has to reach whoever configures your billing.
What to configure once, and check
- Enter your GSTIN in settings so it prints on every bill. A bill without it is not a valid tax invoice.
- Set the tax rate that applies to your category, and confirm it against one printed bill rather than assuming.
- Print a test bill with a discount and check that tax was calculated on the discounted amount.
- Cancel a test bill and confirm the next bill takes the following number rather than the cancelled one.
- Bill from two devices at once if you run more than one counter, and confirm the numbers do not collide.
Those five checks take fifteen minutes and cover the failures that are expensive to discover later. The last two are the ones almost nobody tests, and they are the ones that produce an unexplainable sequence.
Keeping records you can actually produce
The question at an audit is rarely whether you charged the right rate. It is whether you can show what you charged, consistently, across a period.
That means bills retrievable by date, a sequence you can explain including its gaps, and sales figures that reconcile with what you filed. A restaurant billing on paper can produce all of it given enough time in a storeroom. A restaurant billing on a system can produce it in a minute, and that difference is most of the practical value of the record-keeping.
Whatever you use, export and keep a copy at period end rather than relying on any single vendor remaining available. Your bills are your records, not your software provider's, and a vendor you leave should not be holding the only copy.
Mistakes worth checking on your own bills tonight
- GSTIN missing from the printed bill.
- Tax not split into CGST and SGST for an in-state supply.
- Discount applied after tax, as above.
- Duplicate bill numbers from a second counter.
- Packaged goods billed at the restaurant rate rather than their own.
- Rounding done twice, once per line and again on the total.
Questions people ask
What GST rate applies to a standalone restaurant?
Most standalone restaurants charge 5% on food without input tax credit, meaning GST paid on purchases cannot be recovered. Restaurants inside hotels above a specified room-tariff threshold are taxed at a different rate with credit available. Rates change by notification, so confirm the current figure with your accountant.
Is GST charged before or after a discount?
After. A discount agreed at the time of supply reduces the taxable value, and tax is calculated on the reduced amount. Applying tax first and then the discount can produce the same total while reporting tax on a value you did not actually supply, which is the figure your return carries.
Does a restaurant bill need to show CGST and SGST separately?
For a supply within your own state, yes. The total rate is split into equal CGST and SGST components and each is shown on the bill. A single combined tax line does not meet the requirement even when the total is correct.
What happens if bill numbers have gaps?
A gap you can explain, such as a cancelled bill whose number was retired, is normal and defensible. A duplicate number, or a sequence that restarts mid-day because a second counter began its own count, is the version that causes problems, because it means two supplies share one identifier.