GST on Food Business 2025: Restaurant Rates, Cloud Kitchens & Swiggy/Zomato Rules Explained

Food business owners — whether you run a roadside stall, a dhaba, a restaurant, a cloud kitchen, or supply packed food — GST rules apply to you differently based on your setup. This guide explains everything clearly.

GST Rates on Restaurants and Food Services

5% GST (No ITC): Standalone restaurants, dhabas, food courts, and takeaway counters NOT in hotels. Applicable to both air-conditioned and non-AC restaurants. Most common rate for small restaurant owners. 5% GST (Composition Scheme option): Small restaurants with turnover up to Rs 1.5 crore can opt for Composition Scheme at 5% with simpler compliance. 18% GST (With ITC): Restaurants inside hotels where room tariff exceeds Rs 7,500 per night. Outdoor catering services.

Cloud Kitchens and Online Food Delivery (Swiggy/Zomato)

Cloud kitchens (delivery-only restaurants) pay 5% GST on food supply. Swiggy and Zomato are required to collect and pay GST on your behalf under Section 9(5) of CGST Act. This means: GST on restaurant food ordered through Swiggy/Zomato is paid by the platform — NOT by the restaurant. However, the restaurant must still be registered under GST and must report their supplies correctly.

GST on Packaged Food Items

NIL GST: Unpackaged/unbranded rice, wheat, flour, pulses, fresh vegetables and fruits. 5% GST: Branded packaged cereals, pulses, flour. Frozen vegetables and fruits. 12% GST: Butter, ghee, cheese, processed food items. 18% GST: Chocolates, instant food mixes, branded namkeen.

Do Small Food Stalls and Dhabas Need GST Registration?

Only if annual turnover exceeds Rs 20 lakh (services) threshold. A small roadside stall with Rs 5 lakh annual revenue does NOT need GST registration. However, once you cross Rs 20 lakh in annual food service revenue, GST registration becomes mandatory. Cloud kitchen operators on Swiggy/Zomato: Must register regardless of turnover (e-commerce operator rule).

Running a food business? Save this guide and share with your restaurant or hotel owner friends. Follow @gstvala on Instagram for bite-sized daily GST updates.