Hotel restaurant GST is confusing because the same property can sell breakfast as part of a room package, room service to an in-house guest, a walk-in restaurant meal, a banquet dinner, and outdoor catering. These should not be treated as one generic "F&B" bucket.
Restaurant service and accommodation both sit within the broader SAC 9963 family, but the rate and ITC condition depend on the service and premises type. The 56th GST Council reforms also moved hotel accommodation up to ₹7,500 to 5% without ITC, so keep accommodation and restaurant treatment separate.
The practical hotel view
- Restaurant service other than at specified premises: commonly 5% with no ITC, subject to the current notification conditions.
- Restaurant service at specified premises: typically covered under the higher-rate entry with ITC treatment tied to the premises definition.
- Outdoor catering and banquet packages: require separate review, especially when bundled with venue rental.
- Meal plan bundled with accommodation: may follow accommodation package treatment when it is a true composite accommodation supply.
Do not use a single POS tax button for every F&B sale. A hotel POS must know whether the bill is restaurant, room service, banquet, package meal, or outdoor catering.
Room service vs restaurant bill
Room service feels like restaurant service operationally, but it is attached to an in-house guest and often posted to the guest folio. The accounting team should still classify the charge correctly and preserve the audit trail from POS order to folio to invoice.
Hotelary POS posts restaurant orders to folios while retaining the original outlet, tax, and item details. This prevents the checkout invoice from collapsing everything into "room charges."
Breakfast included in room rate
If breakfast is included as part of a CP room package, the tax treatment may be different from a walk-in breakfast buffet. The booking engine should store whether the meal is included in the accommodation package or sold as a separate restaurant item. That distinction matters for GST and revenue allocation.
Banquets and events
Banquet invoices often combine hall rental, food, AV, decor, rooms, and service charges. These should be line-itemed and mapped to the correct tax treatment. One vague "event package" invoice may be convenient for sales but painful during GST reconciliation.
Common mistakes
- Applying restaurant GST to bundled accommodation packages without review.
- Applying accommodation GST to walk-in restaurant bills.
- Not separating banquet rental from F&B.
- Posting POS totals to folio without tax details.
- Using outdated "specified premises" rules after notification changes.
What your software should do
- Store outlet-level tax rules.
- Preserve POS item tax breakup after room posting.
- Support separate ledgers for accommodation, restaurant, banquet, and catering.
- Show GST rate and SAC per line on the final invoice.
- Export GSTR-ready summaries by service category.
Further reading
- CBIC GST goods and services rates for current SAC 9963 entries.
- GST Portal for return filing.
- For room rates, read current GST on hotel accommodation.
Disclaimer: Restaurant and catering GST treatment changes through notifications. Confirm the current rate and ITC condition with your CA.
