Getting restaurant billing and GST right

Two separate problems

"Billing" in a restaurant is really two problems that get discussed as one.

The first is compliance: what the bill must show, at what rate, in what format. It is a solved problem with a definite answer, and most restaurants get it roughly right and then never revisit it.

The second is throughput: how long it takes to produce a bill during a rush, and why a queue forms at the counter at 10:30. This is where the actual daily pain is, and it is rarely discussed as a billing problem at all.

This guide covers both, in that order.

A note before the tax section: GST rates, thresholds and invoicing requirements have been revised several times since 2017 and continue to change. Treat everything below as orientation and confirm your own position with your accountant. This is not tax advice.

What rate applies to you

Broadly, restaurants in India fall into two buckets:

The second row is the one worth checking carefully if you operate inside a hotel, because the threshold has moved and the difference between the two treatments is substantial — both in the rate and in whether you can claim credit on your inputs.

The trade-off in the first row is deliberate: the lower rate comes with no input tax credit, meaning the GST you pay on rent, supplies and equipment is a cost rather than something you can offset. This matters when you are modelling margins, because a 5% rate is not simply "cheaper" — it changes what your input costs actually are. The knock-on effect on your cost base belongs in the arithmetic in restaurant profit margins.

Alcohol sits outside GST entirely and attracts state excise and VAT, which is why bars generally run two tax treatments on one bill.

What the bill must show

A compliant tax invoice for a restaurant carries:

• Your restaurant's name, address and GSTIN
• A consecutive serial number, unique within the financial year, with no gaps
• The date of issue
• An itemised description of what was supplied, with quantities
• The taxable value before tax
• The rate and amount of tax, split into CGST and SGST as separate lines
• The total
• The guest's GSTIN and address, if they are registered and ask for it

Three formatting errors are common enough to name:

A single combined GST line. A 5% bill must show 2.5% CGST and 2.5% SGST separately. "GST 5% — ₹42.50" on its own does not meet the requirement.

Broken serial numbering. Numbers must run consecutively. Gaps invite questions at assessment, and they are usually caused by cancelled bills being deleted rather than recorded as cancelled.

Service charge presented as a tax. Covered below, and the most common source of guest complaints.

A worked example

A table orders three dishes totalling ₹1,200 before tax, at the 5% rate:

If the restaurant also levies a 10% service charge, it goes before tax and is shown as its own line, clearly labelled — not merged into the subtotal and not adjacent to the tax lines in a way that implies it is one of them.

Service charge, plainly

Service charge is not a tax. It is an amount the restaurant adds and keeps.

Three things follow from that:

1. It is not mandatory. Guests may decline it, and a restaurant refusing to remove it on request is on weak ground.
2. It must be visually distinct from GST on the bill. If a guest cannot tell at a glance which line is a government levy and which is yours, the bill is badly designed regardless of whether it is technically compliant.
3. It should be disclosed before ordering, on the menu, not discovered at the end.

Restaurants that state it clearly on the menu and remove it without argument when asked have far fewer complaints than those that bury it. The revenue difference is small. The reputational difference is not.

The real problem: the counter queue

Here is the part that actually costs you every night.

In most restaurants the order is entered twice. Once when it is taken — on a pad, a terminal or an app. Once again at the end, into whatever produces the bill.

That second entry happens at the worst possible moment: the guest is ready to leave, several tables want to settle at once, and one person at a counter is retyping meals that were already recorded an hour ago.

This is why the queue forms. It is structural, not a staffing problem, and adding a second person to the counter only halves it.

The symptoms are recognisable:

• Bills take longer for large tables than the last course did
• Totals occasionally do not match what the kitchen sent
• Rounds get missed on tables that ordered several times
• The table stays "occupied" in everyone's mind long after the guest has gone
• Closing involves reconciling two sets of numbers that should have been one

The fix is not a faster cashier. It is that the bill should be generated from the order that already exists rather than re-entered. If your ordering and billing live in separate systems, that re-entry is unavoidable — which is one of the specific questions worth asking before choosing software, covered in the restaurant management software guide.

A practical measure: time the gap between a guest asking for the bill and the bill reaching the table, for one busy service. Most owners have never measured it and are surprised. It is also one of the four segments of the table cycle in table management — the bill is often the largest recoverable block of time in the whole sitting.

Recording how guests pay

Whatever produces your bill, record the payment method — cash, card or UPI — with a reference where one exists.

Two reasons, and the second compounds:

Reconciliation. A card total you can compare line by line against the machine's settlement report is a comparison. A lump sum is an investigation.

The payment mix is a real business number. Your cash-to-UPI ratio determines how much float you need on hand, how much cash handling risk you carry, and what your settlement timing looks like. Most owners cannot state it, because the data was never captured. It belongs in the monthly review alongside the other numbers worth tracking.

Common mistakes

Setting the tax rate once and never revisiting it. Rates and thresholds have moved. An annual check with your accountant costs nothing.

Deleting cancelled bills. Record them as cancelled with a reason. A gap in the serial sequence is worse than a cancellation.

One combined GST line. Split CGST and SGST.

Burying service charge. Disclose on the menu, show separately, remove on request.

Billing rounds separately. One table, one evening, one invoice.

Blaming the counter queue on the cashier. It is a re-keying problem. Look upstream.

What to do this month

1. Pull your last ten bills and check them against the required-fields list above.
2. Confirm your rate and threshold position with your accountant, in writing.
3. Check your serial sequence for the last quarter. Any gaps?
4. Look at how service charge appears on the printed bill, from a guest's point of view.
5. Time bill-request to bill-delivered for one busy service.
6. Start recording payment method with a reference, if you are not already.

The short version

• Most standalone restaurants are at 5% GST without input tax credit; hotel-premises restaurants above the notified tariff threshold are at 18% with credit. Confirm your own position.
• A tax invoice needs GSTIN, unbroken serial numbering, date, itemisation, taxable value and CGST/SGST shown separately.
• Never combine CGST and SGST into a single line.
• Service charge is yours, not a tax. Disclose it, separate it, remove it on request.
• The counter queue at close is caused by re-keying the order, not by the cashier.
• Record how guests paid. The payment mix is a business number you cannot reconstruct later.