Do you need to register?
A café or restaurant sells a service, so the usual limit for GST registration is ₹20 lakh of turnover a year (₹10 lakh in some special-category states). Below that, registration is optional. Many cafés register anyway because suppliers, offices or delivery partners ask for a GSTIN.
If you sell through food delivery apps, the app collects and pays GST on those restaurant orders to the government. You still need to keep your own records. Ask your CA how this affects your registration and returns.
Which rate do you charge?
| Where you serve food | GST | Input tax credit |
|---|---|---|
| Standalone café, restaurant, QSR, cloud kitchen, takeaway (AC or non-AC) | 5% (2.5% CGST + 2.5% SGST) | No |
| Restaurant inside a hotel where any room is above ₹7,500 a night | 18% | Yes |
| On the composition scheme | 5% of turnover, paid by you | No |
For most small cafés the answer is simple: 5% GST, without input tax credit. That means you can't reduce your GST by the GST you paid on milk, rent or equipment.
Regular GST or the composition scheme?
Restaurants with turnover up to ₹1.5 crore can choose the composition scheme. You pay a flat 5% of your turnover yourself, and you file less often. But you cannot charge GST to your customers, so the tax comes out of your own pocket.
| Regular (5%) | Composition | |
|---|---|---|
| Who pays the 5% | The customer, on the bill | You, from your turnover |
| Bill name | Tax invoice | Bill of supply |
| Show GST on the bill | Yes, CGST and SGST | No |
| Returns | GSTR-1 and GSTR-3B (monthly, or quarterly under QRMP) | CMP-08 every quarter, GSTR-4 once a year |
Composition can make sense if your customers are price-sensitive and your prices already include everything. Regular GST usually makes more sense if you can add GST on top of your prices. Some cafés can't use composition at all, for example those serving alcohol, so check with your CA.
What your bill must show
- Your business name, address and GSTIN
- A bill number that runs in order and is unique for the financial year
- The date
- Each item with its value
- The taxable value, the CGST and SGST rates and amounts, and the total
On the composition scheme, title it Bill of supply and print: "composition taxable person, not eligible to collect tax on supplies". You can try both formats with our free GST bill format tool.
Month-end without the headache
Most of the GST work is collecting your sales by tax rate and giving it to your CA. If your bills are on paper, that's hours of adding up. If your billing software keeps them, it's a few taps.
Rasoi makes GST the easy part.
GST-ready bills with CGST and SGST, a GSTR-1 summary by rate, and a CA pack with a Tally import file, in one tap.