Food you cook and serve is a service with a SAC code, while sealed bottles, mithai boxes and namkeen packets are goods with their own HSN codes. Here is how to tell them apart on one restaurant bill and set both up correctly in your billing software.
If you run a restaurant, cafe, bakery or sweet shop, your bill usually carries two different kinds of codes at the same time. The food you cook and serve is a service, so it takes a SAC. The sealed bottle of water, the packet of namkeen and the box of mithai a customer carries home are goods, so they take an HSN. Most people searching for an HSN code for restaurant are really looking for both halves, plus the rule that decides which one applies to a given line on the bill.
Here is how to settle it once in your item master so you are not guessing bill by bill.
There is no HSN code for "serving food in a restaurant", because serving food is a service. It falls under SAC heading 9963, and the one you will use most is:
For a standalone restaurant or cafe, restaurant service is taxed at 5% with no input tax credit. That "no ITC" part is the expensive bit: you cannot offset the GST you paid on rent, equipment, packaging or raw material against it. A restaurant inside a hotel where any room is declared above Rs 7,500 a night is taxed at 18%, and there ITC is available. If you fall in that category, your accountant should be claiming it.
This is the question that comes up most, and the answer is simpler than people expect. Dine-in, takeaway, parcel and delivery of food you prepared are all restaurant service under SAC 996331 at 5%. The code and the rate do not change because the customer walked out with the food instead of sitting down.
A few related points worth knowing:
When you sell a manufacturer-sealed item at MRP without doing anything to it, you are selling goods. It takes the product's HSN and the product's rate, and the ITC on that purchase is available to you in the normal way. A cold drink bottle handed over the counter is not the same supply as a lassi you blended.
In practice, the test most shops can apply reliably is: was it prepared on your premises, or did it leave your shop in the same sealed form it arrived in? The first is service, the second is goods.
Sweet shops and ice cream parlours are the messiest case, because a single shop often does both things.
If you run a sweet shop with a small restaurant section, keep separate records for the two activities. Mixing them is the single most common reason these businesses lose ITC they were entitled to, or get a demand on counter sales they billed as restaurant service.
Rates below reflect the slab structure after the rate rationalisation. Confirm anything unusual against the current notification or your CA before you lock it into your item master.
| What you are selling | Code | Rate | ITC |
|---|---|---|---|
| Restaurant service, standalone (dine-in, takeaway, parcel, delivery) | SAC 996331 | 5% | No |
| Restaurant in a hotel with any room above Rs 7,500 | SAC 996331 | 18% | Yes |
| Outdoor catering at a hall or event | SAC 996334 | 5% | No |
| Mithai and sweetmeats sold over the counter | HSN 2106 90 | 5% | Yes |
| Namkeen, bhujia, mixtures, pre-packaged and labelled | HSN 2106 90 | 5% | Yes |
| Ice cream sold by a parlour or over the counter | HSN 2105 | 5% | Yes |
| Biscuits, rusk, cakes and pastries | HSN 1905 | 5% | Yes |
| Bread, unbranded | HSN 1905 | Nil | n/a |
| Chocolate and cocoa preparations | HSN 1806 | 5% | Yes |
| Packaged drinking water | HSN 2201 | 5% | Yes |
| Carbonated drinks and caffeinated energy drinks | HSN 2202 10 | 40% | Yes |
| Fruit juice based drinks, flavoured milk | HSN 2202 99 | 5% | Yes |
| Tea and coffee sold as packed product | HSN 0902 / 0901 | 5% | Yes |
Not for the act of serving food. Restaurant service is classified under SAC 9963, most commonly 996331 for restaurants, cafes and similar eating places. You will still use real HSN codes on the same bill for any sealed packaged product you resell, such as bottled water, cold drinks or packets of namkeen.
No. Takeaway, parcel and door delivery of food you prepared are the same restaurant service as dine-in, taxed at 5% without input tax credit for a standalone restaurant. Packing charges are part of that same supply and should not be billed separately at a different rate.
Mithai and sweetmeats sold over the counter are goods under HSN 2106 90. If the same sweet shop also has a seating area and serves food there, that portion is restaurant service under SAC 996331, and you should keep separate records for the two so counter sales are not swept into the no-ITC restaurant rate.
A standalone restaurant charging 5% cannot claim ITC on its inputs, which includes rent, kitchen equipment, packaging and raw material. A restaurant in a hotel with declared room tariff above Rs 7,500 charges 18% and can claim ITC. Counter sales of packaged goods are a separate supply, so the ITC on those purchases is available in the normal way.
It follows the same turnover-based rule as any other business: 4 digits if your aggregate turnover is up to Rs 5 crore in B2B supplies, 6 digits above that, and 8 digits for notified items and exports. SAC codes are quoted at 6 digits in practice. Store the longest code you can find on each item so the invoice and the GSTR-1 summary always agree.
Start using Trayvo today and see the difference in your shop.