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Jan 8, 2024

Decoding Restaurants HSN/SAC Codes and GST Rates in India

Nishtha Arora



It can be difficult to understand the complexity of India's Goods and Services Tax (GST), particularly for tax professionals and restaurant owners. Knowing the appropriate restaurants HSN/SAC codes and GST rates for different food and beverage services is one of the trickiest parts. Worry not, tax enthusiasts! This blog post is designed to be your go-to resource for understanding this confusing domain!

HSN vs SAC: A Tale of Two Codes

Before diving into the nitty-gritty of rates, let's address the two alphanumeric codes: HSN and SAC.

  • HSN (Harmonized System of Nomenclature): This international system classifies goods based on their nature and composition. It's a 6-digit code that serves as a global language for trade.
  • SAC (Service Accounting Code): Introduced in India under GST, the SAC code is an 8-digit extension of the HSN code, specifically designed for classifying services. It adds two additional digits to the HSN code to further categorize services within a particular product group.

Understanding SAC Codes for Restaurants

For restaurants, the relevant SAC code falls under the broad category of 9963 - Services provided by restaurants. This code encompasses a wide range of food and beverage services, including:

  • Serving of food and beverages for consumption on or off the premises
  • Take-away and delivery services
  • Catering services
  • Supply of food and beverages for events
  • Provision of banquet halls and open spaces for events
SAC List for Restaurants Services
CodeDescription for Service
99631Services provided by Restaurants, Cafes and similar eating facilities including takeaway services, Room services and door delivery of food.

GST Rates Applicable to Restaurants

Now, the million-dollar question: what GST rates apply to these restaurant services? Well, it depends on several factors, including:

  • Type of restaurant: GST rates differ for air-conditioned and non-air-conditioned restaurants. For air-conditioned restaurants, the standard rate is 18%, while non-air-conditioned ones attract a lower rate of 5%.
  • Nature of service: Certain services within the 9963 SAC code have specific GST rates. For example, outdoor catering attracts an 18% rate, while takeaway and delivery services are taxed at 5%.
  • Date of service: The GST rate applicable to a particular service can also change depending on the date it was provided. For instance, the rate for hotel accommodation was revised from 15% to 18% on July 27, 2017.

Special GST Rates for Restaurants

To further incentivize the restaurant industry, the Indian government has introduced special GST rates for certain scenarios:

  • Supply of food items to the government or specified institutions: A concessional rate of 5% applies to food items supplied to government departments, defense forces, public hospitals, and educational institutions.
  • Inter-state supply of food items: For inter-state supply of food items, the integrated GST (IGST) rate is 5% without the need for input tax credit (ITC) availed.

Staying Compliant: Tips for Restaurants

In this dynamic world of GST, restaurants must stay updated on the latest codes and rates to ensure compliance. Here are some helpful tips:

  • Maintain proper records of invoices and bills: This will help you claim ITC and avoid unnecessary tax liabilities.
  • Consult with a tax advisor: A qualified tax professional can guide you through the complexities of GST and ensure you're adhering to all regulations.
  • Utilize GST software: Invest in reliable GST software to automate calculations, generate invoices, and track compliance.

In a NutShell

Understanding HSN/SAC codes and GST rates for restaurants may seem like an uphill climb, but with the right knowledge and guidance, you can do that, too. Remember, staying informed and compliant is key to ensuring your restaurant's smooth operation and avoiding potential tax woes. So, keep this blog post handy as your trusty companion on your GST journey!

Note: This blog post is intended for informational purposes only and should not be construed as professional tax advice. Please consult with a qualified tax advisor for specific guidance on your restaurant's GST obligations.

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