Quick answer: Most food businesses don’t need GST registration until annual turnover crosses ₹20 lakh (₹10 lakh in special category states). Restaurants, stalls, takeaways and cloud kitchens charge 5% GST without input tax credit. On orders through Swiggy and Zomato, the platform collects and pays the 5% GST, not you. The composition scheme is available up to ₹1.5 crore turnover but rarely saves tax for restaurants.
GST confuses food entrepreneurs more than any other topic. This guide answers the most common questions in plain language.
Do I need GST registration?
Supplying food for eating (at a stall, in a restaurant, as takeaway or by delivery) is treated as a supply of service under GST. The registration threshold for services is:
| Location | Registration needed when annual turnover exceeds |
|---|---|
| Most states | ₹20 lakh |
| Special category states (e.g. Manipur, Mizoram, Nagaland, Tripura) | ₹10 lakh |
“Turnover” means your total sales across all your businesses on one PAN, including sales through Swiggy and Zomato.
You might still want to register voluntarily below the threshold if corporate or B2B customers need a GST invoice from you.
What GST rate applies to food businesses?
| Type of business | GST rate | Input tax credit? |
|---|---|---|
| Restaurant, café, dhaba, food stall, takeaway | 5% | No |
| Cloud kitchen / delivery | 5% | No |
| Restaurant inside a hotel with room tariff above ₹7,500 (“specified premises”) | 18% | Yes |
| Outdoor catering (at non-specified premises) | 5% | No |
| Selling packaged/branded food as goods | Depends on product (0%, 5% or 18%) | Yes |
“No input tax credit” means you cannot reduce your GST bill by the GST you paid on rent, equipment or Swiggy commissions. That GST becomes part of your cost.
How Swiggy and Zomato GST works (Section 9(5))
Since 1 January 2022, food delivery platforms are treated as the supplier for GST purposes on restaurant orders placed through them. In practice:
- The platform collects 5% GST from the customer and pays it to the government.
- You do not pay GST again on those orders.
- You do receive a GST invoice from the platform for its commission and fees, at 18%. As a restaurant at 5% without ITC, you cannot claim this 18% back.
- If you are registered, your Swiggy/Zomato sales still count in your turnover and must be reported in your GST return as supplies on which the platform paid tax.
Should I choose the composition scheme?
The composition scheme lets small businesses pay tax at a flat rate on turnover and file simpler returns.
| Regular (5%, no ITC) | Composition for restaurants (5%) | |
|---|---|---|
| Turnover limit | None | Up to ₹1.5 crore |
| Collect GST from customer? | Yes, shown on bill | No, you pay it out of your own price |
| Returns | Monthly/quarterly GSTR-1 and GSTR-3B | Quarterly CMP-08 and annual GSTR-4 |
| Input tax credit | No | No |
For a restaurant, both options cost 5%, but under composition you can’t add GST to the bill, so it comes out of your margin. Composition mainly helps with paperwork. For most small food businesses that are registered, the regular scheme at 5% is better because the customer bears the tax.
Worked example
Asha runs a cloud kitchen with ₹30 lakh annual sales: ₹24 lakh through Swiggy/Zomato and ₹6 lakh direct (phone and WhatsApp orders).
- She must register, because turnover is above ₹20 lakh.
- On ₹24 lakh of app sales, the platforms pay the GST. She pays nothing extra.
- On ₹6 lakh of direct sales she charges 5%: ₹30,000 GST collected from customers and paid to the government.
- The 18% GST on platform commissions is a cost to her; she can’t claim it.
Money tip
FAQ
Does a small food stall need GST? No, not until annual turnover exceeds ₹20 lakh (₹10 lakh in special category states).
What is the GST rate on restaurant food? 5% without input tax credit for most restaurants; 18% with credit only for restaurants in hotels with room tariffs above ₹7,500.
Do I pay GST on Swiggy and Zomato orders? No. The platform pays GST on those orders under Section 9(5).
Can I claim GST paid on equipment and rent? Not if you charge 5% without input tax credit, which is the case for almost all restaurants and stalls.
Is the composition scheme good for a restaurant? It simplifies returns but you can’t collect GST from customers, so the 5% comes from your margin. Most small restaurants are better off on the regular scheme.
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