GST on restaurant bills: a plain guide

What a restaurant bill in India has to show, and how the tax is worked out. Written for owners and managers, not accountants.

Tax rules change, and the rules for restaurants in hotels were revised in 2025. This is general information, not tax advice, last checked in October 2026; confirm your own case with a chartered accountant or on the GST portal before you rely on it.

The two rates most restaurants meet

• 5%, without input tax credit (ITC). This is the usual rate for a standalone restaurant or café, for dine-in and takeaway. It is shown as 2.5% CGST + 2.5% SGST. Because you cannot claim ITC on what you buy, you don’t reduce the tax you charge by the GST you paid on supplies.
• 18%, with ITC. This can apply to restaurant service inside a hotel whose room tariff is ₹7,500 a night or more (“specified premises”). Which side of the line a hotel falls on depends on the tariff it actually charged, under rules that were changed in 2025, so a hotel restaurant should get this confirmed in writing. It is shown as 9% CGST + 9% SGST. A standalone restaurant cannot choose this rate.

Outdoor catering and some other services follow their own rules. If you run a hotel, a banquet or a cloud kitchen, ask your CA which one you are.

CGST + SGST, or IGST

When the customer is in the same state as you, the tax is split in half: CGST goes to the centre, SGST to the state. IGST (the whole amount as one tax) is used when the supply crosses a state line. A walk-in meal is almost always CGST + SGST.

Tax on top, or already in the price

Both are fine, as long as the bill makes it clear. Many cafés print menu prices that already include GST; many restaurants add GST at the end. The way to work out the tax from an inclusive price is: tax = price − price ÷ (1 + rate). For ₹105 at 5%, that is ₹105 − ₹100 = ₹5. Try it in the GST bill calculator.

Service charge

Service charge is optional for the guest, and it is part of the value the GST is charged on. If you add 10% service charge to a ₹1,000 order at 5% GST, the tax is worked out on ₹1,100, which is ₹55. Say plainly on the menu and the bill that it is voluntary, and remove it when a guest asks.

What a correct bill shows

• Your name, address and GSTIN, and the bill number (in a running series).
• Date and time, and the table or order number.
• Each item, quantity and price.
• Discounts shown as a line, service charge as a line.
• The taxable value, each tax (CGST, SGST) with its rate, and the total.
• Any rounding, shown as its own line, so the total matches what is paid.

Mistakes that cost money

• Charging 18% on a standalone restaurant bill, or 5% where 18% applies.
• Skipping bill numbers, or restarting the series in the middle of the year.
• Editing a paid bill by deleting it instead of cancelling it with a credit note.
• Rounding each item separately so the totals drift from the bill.

RestroSimplify keeps the bill number series, the tax split and the rounding for you, and gives you a GST register to hand to your CA each month.