It is important for any restaurant and food service operations in India to have knowledge of HSN codes. HSN codes aren’t just a paper exercise – they outline your GST rates and compliance thresholds, and can even affect the profit margin for your restaurant. This article is a useful, comprehensive guide to HSN code for restaurants; how HSN codes function, the implications with GST, and compliance activities for 2025.
What is HSN Code, and Why Does It Matter?
HSN codes are a system of identifying services/goods that is used universally. In India, we use HSN codes when referring to goods, and SAC (Services Accounting Code) when referring to services. In the use of HSN codes and SAC to GST, the codes are often substituted for each other. For food businesses, understanding the HSN code for food services is crucial for accurate tax calculation and compliance.
Importance of HSN Code for Restaurant Services in India
- GST Compliance: Using the correct HSN code means that you will be calculating and reporting your GST correctly.
- Tax Rate Determination: The GST tax rates are assigned to actual goods/services by HSN/SAC codes.
- Audit and Transparency: The authorities look to determine the nature of your business and tax payments using HSN/SAC codes.
- Ease of Business: Categorizing goods/services correctly does not lead to legal disputes and penalties.
The HSN Code for Restaurant Services in India
For restaurants, cafés, and similar food-serving businesses (including takeaway, room service, and door delivery of food), the appropriate HSN code is 996331. Here is the breakdown:
- 99: Chapter for all services.
- 6331: Services of restaurants, cafés, and similar eating establishments (including takeaway, room service, and door delivery of food).
This code encompasses a variety of food services and is therefore the main HSN classification for restaurants in India.
GST Rates for Restaurants Under HSN 996331
The GST rates relevant to restaurant services are dynamic and based on the type of business and nature of the service. Below is a table summarizing the GST rates on various restaurant formats under HSN 996331:
| Type of Restaurant/Service | GST Rate | Input Tax Credit (ITC) |
| Standalone restaurants (AC/Non-AC) | 5% | Not Allowed |
| Restaurants in hotels (room tariff < ₹7,500) | 5% | Not Allowed |
| Restaurants in hotels (room tariff ≥ ₹7,500) | 18% | Allowed |
| Outdoor catering services | 18% | Allowed |
| Quick Service Restaurants (QSR) | 5% | Not Allowed |
| Food services by Indian Railways/IRCTC | 5% | Not Allowed |
How to Identify and Use the Correct HSN Code?
Use the information below to consider how to make sure that under the heading “HSN 996331”, you are accurate for GST purposes. Steps to identify and use HSN 996331:
- Look at Your Business Activities: Ensure your service qualifies as a restaurant, cafe, takeaway, or delivery.
- Check Government Notifications: Check which official GST circulars or notifications are in correspondence.
- Get Help: If this process seems too advanced to you, contact a GST consultant or chartered accountant.
A proper understanding of the food and beverage HSN code will help ensure compliance for your restaurant to operate properly.
Related HSN Code for Food Services
Restaurants often provide a mix of services. Here’s an overview of related HSN codes and their typical applications, so you can classify all your offerings correctly:
| HSN/SAC Code | Description | GST Rate |
| 996331 | Restaurant, café, takeaway, room service, and food delivery services | 5%/18% |
| 996332 | Services by hotels, inns, guest houses, clubs (including room service, takeaway, delivery) | 12% |
| 996333 | Services in canteens and similar establishments | 18% |
| 996334 | Catering services in exhibition halls, events, marriage halls, etc. | 18% |
| 996335 | Catering in trains, flights | 18% |
| 996336 | Food/beverage supply to airlines, transport operators | 18% |
| 996337 | Other contract food services | 18% |
| 996339 | Other food and beverage serving services not elsewhere classified | 18% |
This table helps you classify all food-related services accurately for GST compliance. Using the correct HSN code under GST for all your services is a key part of restaurant tax compliance.
Key Compliance Tips for Restaurant Owners
Understanding the ins and outs of GST and HSN codes can be very complicated. However, if you follow the best practices we discuss below, you can have peace of mind that your business will be compliant and ready for an audit:
- Always use the correct HSN code.
- Update your billing software to ensure the correct HSN code and GST rate are on your invoice.
- Stay on top of GST communications.
Talk to professionals if you have complex service offerings. If you have a service involving hotels, you must consult with a professional who can confirm your classification. Good restaurant tax compliance will help you avoid costly mistakes.
Empowering Restaurant Growth: The Role of Credlix in Food Business Financing
Once a restaurant owner manages compliance, such as correctly applying the restaurant HSN code and operating effectively, the market environment is where they will suffer the biggest problem, especially in terms of paying suppliers on time, obtaining inventory, and managing the supply chain and delivery. This is where Credlix will become a change-maker for food businesses.
How Credlix Helps Food Businesses:
- Access to Working Capital: Acquire up to 95% of the value of invoices in as little as 48 hours, and with no collateral requirement.
- Accessible Financing: Financing solutions tailored to restaurants, food manufacturers, and suppliers, including export factoring and purchase order finance.
- Digitized Process: Full end-to-end digital application, approval, and disbursal, so you focus on running your restaurant.
- International Capabilities: Support for businesses with domestic and international supply chains, supported by the Moglix Group with a global network.
Unlocking Compliance and Growth in 2025
All businesses associated with the food industry, and particularly restaurants, need to be experts in the HSN code for restaurant services in India, specifically, the HSN code 996331, to attain GST compliance and to attain productivity. Stay informed with the journal alerts for GST rates, use the correct codes, and manage your accounting and finance digitally to ensure you are compliant and competitive.
If you are a restaurant looking to grow, manage cash flow, and facilitate supplier payments, then Credlix will be an easy finance provider. It offers tailored working capital solutions for your restaurant, so you can focus on providing an exceptional experience for your customers. With good restaurant tax compliance, your business will prosper in 2025 and into the future.
