Most restaurant owners don't need to become GST experts. You need to know three things: which rate applies to your bills, what a valid tax invoice must show, and which returns you file and when. This guide covers those in plain language. Rates and thresholds do change — treat this as a working overview and confirm specifics with your accountant.

1. Which GST rate applies to restaurant food

For a standalone restaurant — dine-in, takeaway or delivery — the common position is:

  • 5% GST on food and beverages served, without input tax credit (ITC). This applies to most independent restaurants, whether air-conditioned or not.
  • 18% GST with ITC if the restaurant operates inside a hotel where the declared room tariff is above the notified limit (₹7,500 per day at the time of writing).
  • Packaged goods sold as-is (a sealed cold drink bottle, a branded packet of chips) can carry their own GST rate separate from the 5% on prepared food.

Alcohol is outside GST entirely — it attracts state VAT/excise and must be billed on a separate liquor invoice, not mixed into the GST food bill.

Practical takeaway: if you run one outlet and aren't inside a premium hotel, you are almost certainly on 5% without ITC. Your POS should be set to that rate by default so staff never pick the wrong slab at the counter.

2. What a compliant tax invoice must contain

A GST tax invoice for a restaurant bill should show:

  • Your legal name, address and GSTIN
  • A unique, sequential invoice number and the date/time
  • Description of items, quantity and unit
  • The HSN/SAC code for restaurant service (services are usually grouped, so a single SAC on the bill is typical)
  • Taxable value, the GST rate, and the tax split — CGST and SGST shown separately for a local sale (or IGST for inter-state, which is rare for a restaurant)
  • Total amount payable, rounded, with the rounding shown
  • Place of supply (your state)

For a walk-in customer you don't need their details. For a company booking that wants to claim the expense, capture their GSTIN on the bill.

3. Composition scheme — the simpler option for small outlets

If your turnover is under the composition limit (₹1.5 crore), you can opt for the composition scheme for restaurants:

  • Flat 5% (2.5% CGST + 2.5% SGST) on turnover
  • You cannot show GST separately on the customer's bill and cannot collect it from them — it comes out of your margin
  • No input tax credit
  • File CMP-08 quarterly and GSTR-4 annually instead of monthly returns
  • Your bill must carry the words "composition taxable person, not eligible to collect tax on supplies"

It trades a little tax cost for much less paperwork. Whether it's worth it depends on your volume and how organised your bookkeeping is.

4. The returns you actually file

Under the regular scheme, a single-outlet restaurant typically files:

  • GSTR-1 — details of outward supplies (your sales). Monthly by the 11th, or quarterly under the QRMP scheme.
  • GSTR-3B — a summary return with your tax liability and payment. Monthly or quarterly under QRMP.
  • GSTR-9 — annual return, if your turnover crosses the notified threshold.

The work at filing time is mostly reconciliation: does the sales total in your books match what your POS recorded, and does that match what you're declaring? If those three numbers agree, filing is quick. If they don't, you spend the evening hunting for the gap.

5. How a POS makes this less painful

You don't need software to be GST-compliant — a manual bill book with the right fields works. But at any real volume, a POS helps because it:

  • Applies the correct rate automatically and prints CGST/SGST split every time
  • Keeps invoice numbers sequential with no gaps (gaps invite questions during assessment)
  • Produces a GSTR-1 / GSTR-3B-ready sales summary so your accountant isn't rebuilding it from bill photos
  • Lets you export tax reports to Excel/PDF for your CA
  • Records everything even when the internet is down, then syncs — so no bill goes unrecorded

POSYatra does all of the above out of the box, with the 5%-no-ITC restaurant setting as the default. If you're evaluating options, our features page lists exactly what's included, and pricing starts at ₹2,500/year for the mobile billing plan.

Quick checklist

  • ☐ Confirm your rate with your CA (5% no-ITC is the common case)
  • ☐ Decide regular vs composition scheme
  • ☐ Make sure every bill shows GSTIN, sequential number, HSN/SAC and CGST/SGST split
  • ☐ Keep liquor billing separate
  • ☐ Reconcile POS sales ↔ books ↔ return, every month