If you have ever stared at a GST invoice wondering which classification to print, you are not alone. The HSN code for restaurants is a common point of confusion, mainly because a restaurant does two different things under GST: it supplies a service and it sometimes sells goods. Getting the classification right keeps your invoices clean and your returns easy to file.
HSN and SAC: what is the difference?
Under GST, goods are classified using the HSN (Harmonised System of Nomenclature) and services are classified using the SAC (Services Accounting Code). A restaurant meal served to a diner is treated as a supply of service, so it is generally reported under an SAC, not an HSN.
- HSN applies to physical goods, such as packaged food products you sell across the counter.
- SAC applies to services, such as serving food and drink for consumption.
The SAC code for restaurant service
Restaurant and catering services generally fall under SAC heading 9963, which covers accommodation, food and beverage services. The supply of food and drink in a restaurant is treated as a service under this heading, with more specific sub-codes for the exact nature of the supply.
Because sub-classifications and rates can be revised, verify the current SAC and applicable rate on the GST portal (gst.gov.in) or with your CA before you finalise your invoice format.
When you might still use an HSN code
A restaurant that also sells packaged goods — sealed bottled drinks taken away, retail packs of sweets, branded sauces or merchandise — may be selling goods rather than a restaurant service. Those items can carry their own HSN codes and rates, which may differ from the rate on your served meals. If you run a bakery counter or a retail shelf alongside your dining area, keep the two supplies clearly separated on the bill.
Why correct classification matters
Using the wrong code is not just a cosmetic error. It affects the rate you charge, how your supply is reported in GSTR-1, and how cleanly your returns reconcile. Mistakes here tend to surface at the worst time, during an audit or a mismatch notice.
- The classification drives the applicable CGST and SGST split on the bill.
- Consistent codes make month-end reconciliation far simpler.
- Clear separation of goods and services avoids disputes over the rate charged.
Whether a code is mandatory on every invoice, and up to how many digits, can depend on your turnover. Confirm the current requirement on gst.gov.in or with your CA, since these thresholds are periodically updated.
Keeping it right at the billing counter
The practical fix is to set classifications once, correctly, and let your billing system apply them automatically. Manual code entry on a busy evening is where errors creep in. A well-configured restaurant POS software can map each menu item and each retail product to the right code and rate, so the correct SAC or HSN prints every time.
- Tag served items to the restaurant-service SAC and retail packs to their own HSN.
- Lock the rate to the classification so staff cannot override it by mistake.
- Carry the same setup across locations so every outlet bills identically.
For chains, consistency is everything. Centralising item masters through multi-outlet management means a code correction made once applies everywhere, and reliable GST billing and e-invoicing keeps the audit trail intact. That turns classification from a monthly worry into a one-time setup.
Frequently asked questions
What is the HSN or SAC code for a restaurant?
Restaurant service is generally classified under SAC heading 9963, covering accommodation, food and beverage services, rather than an HSN, because a served meal is treated as a service. Verify the exact sub-code and rate on gst.gov.in or with your CA.
Do restaurants use HSN or SAC codes?
Both can apply. Served food and drink use an SAC because they are a service, while any packaged goods you sell separately, like sealed bottled drinks or retail packs, may carry their own HSN codes.
Is the code mandatory on every restaurant invoice?
Whether a code must appear, and to how many digits, can depend on your turnover. Requirements are updated from time to time, so confirm the current rule on gst.gov.in or with your CA.
What GST rate goes with the restaurant SAC code?
Standalone restaurants commonly apply 5% GST without input tax credit, but rates depend on the type of establishment and can change. Always verify the current rate on gst.gov.in or with your CA.
