Simplifying GST on Food and Restaurants – How to Implement It in Tally Prime

Call CA Tally HelpDesk +91 9205471661, 7428779101

The food and restaurant industry in India plays a vital role in the economy, serving millions of customers daily. With the introduction of the Goods and Services Tax (GST), this sector has undergone a major transformation in the way taxes are calculated, billed, and reported. Managing these GST calculations can be challenging for restaurant owners, but Tally Prime makes it easier by automating tax entries, billing, and compliance.

In this article, we’ll understand GST rules and rates on food and restaurants and see how you can implement them efficiently in Tally Prime without complications.

1. Understanding GST on Food and Restaurants

GST replaced multiple indirect taxes like VAT, Service Tax, and Excise Duty. Under the GST framework, restaurants and food businesses are classified based on their type and service. The GST rate varies depending on whether the restaurant is air-conditioned, non-air-conditioned, or part of a hotel.

Here’s a quick breakdown of GST rates applicable in the food industry:

• 5% GST (without ITC):
  Applicable to standalone restaurants (non-AC or AC) and small food outlets. However, Input Tax Credit (ITC) cannot be claimed under this rate.
• 18% GST (with ITC):
  Applicable to restaurants inside hotels where the room tariff is ₹7,500 or more per night. Businesses can claim ITC under this rate.
• 5% GST (Takeaway or Cloud Kitchen):
  Takeaway services and cloud kitchens are treated as restaurants and charged at 5% without ITC.
• 0% GST (Essential Food Items):
  Unpacked and unbranded food items such as fruits, vegetables, milk, and cereals are exempt from GST.

Knowing which GST rate applies to your restaurant is essential to avoid penalties and ensure accurate tax filing.

2. How to Manage GST on Food Sales in Tally Prime

Tally Prime allows restaurant owners to configure GST in a few simple steps. Whether you operate a single restaurant or multiple outlets, you can use Tally to manage billing, taxes, and compliance effortlessly.

Here’s how you can set up and use GST for food billing in Tally Prime:

Step 1: Enable GST in Tally Prime

• Open your company in Tally Prime.
• Go to F11: Features → Statutory & Taxation.
• Set “Enable Goods and Services Tax (GST)” to Yes.
• Enter your GSTIN number and registration details.
• Press Ctrl + A to save the settings.

Step 2: Create GST Ledgers

You’ll need to create separate ledgers for CGST, SGST, and IGST.

• Go to Accounts Info → Ledgers → Create.
• Under Duties & Taxes, choose the GST type (CGST, SGST, or IGST).
• Assign the appropriate percentage rate (2.5% each for CGST/SGST if total 5%).
  This helps in automatic calculation during billing.

Step 3: Create Stock Items for Food Products

• Go to Inventory Info → Stock Items → Create.
• Add each menu item or food category (e.g., Pizza, Coffee, Thali, etc.).
• Assign appropriate GST rates (5% or 18%) for each item.
  This ensures every food item automatically attracts the correct tax rate during billing.

Step 4: Create Sales Ledger

• Go to Accounts Info → Ledgers → Create.
• Under Group, select Sales Accounts.
• Set “Is GST Applicable” to Yes.
• Choose the right Nature of Transaction (Sales – Local or Interstate).

Step 5: Generate GST-Inclusive Invoices

When creating a sales voucher or bill:

• Choose the customer’s name.
• Select food items sold.
• Tally Prime automatically applies the relevant CGST and SGST based on your settings.
• The total invoice will display the GST breakup and final amount payable by the customer.

This makes restaurant billing accurate, compliant, and transparent.

3. Benefits of Using Tally Prime for Restaurants

Using Tally Prime for managing GST in the food business provides several advantages:

• Automated GST Calculation: No manual work — Tally applies correct GST rates automatically.
• Simplified Return Filing: Generate GSTR-1, GSTR-3B, and GSTR-9 directly from Tally.
• Real-Time Reports: Track sales, stock, and tax liability anytime.
• Multi-Outlet Management: Manage accounting for different restaurant branches from one platform.
• Error-Free Billing: Reduces manual mistakes and ensures accurate tax reporting.

4. Conclusion

Understanding GST rules on food and restaurants is crucial, but implementing them in daily billing becomes effortless with Tally Prime. Whether your restaurant operates under a 5% or 18% GST rate, Tally ensures correct tax computation, invoice generation, and return filing in just a few clicks.

For restaurant owners, Tally Prime is not just accounting software — it’s a complete digital partner that ensures compliance, saves time, and enhances efficiency.

Powered by Binarysoft Technologies
Authorized Tally Partner
�� 1626/33, 1st Floor, Naiwala, Karol Bagh, New Delhi – 110005, INDIA
�� +91 7428779101, 9205471661, 8368262875
�� tally@binarysoft.com (10:00 AM – 6:00 PM, Mon–Fri)