Last Updated on September 11, 2026
Running a cloud kitchen means dealing with a GST framework built for restaurants, then patched repeatedly to handle the fact that most orders now come through Swiggy or Zomato rather than a walk-in customer. That patchwork shows: cloud kitchen owners are often confused about whether they charge GST at all, who pays it when an order comes through an app, and why they can’t claim credit on raw materials. This guide clears up exactly how GST applies to a cloud kitchen, from registration through to e-commerce operator rules.
Quick Summary
A cloud kitchen that prepares and supplies food for consumption is generally treated as providing restaurant service under GST. This includes takeaway and door-delivery orders, and the applicable rate for restaurant service other than at specified premises is generally 5% without input tax credit (ITC).
- Orders supplied through platforms such as Swiggy or Zomato can fall under Section 9(5), under which the e-commerce operator is responsible for paying GST on the notified restaurant service.
- The cloud kitchen does not become free from GST compliance simply because the platform pays the tax. Applicable registration, record-keeping and return requirements should still be considered.
- For supplies covered by Section 9(5), the supplier can be eligible for the GST registration threshold exemption, subject to the applicable conditions.
- A cloud kitchen may be eligible for the composition scheme where the applicable conditions are satisfied. Selling through an aggregator does not by itself mean that the business is automatically ineligible for composition.
- If the business also makes supplies other than restaurant service, the GST treatment may be different and should be reviewed separately.
Not sure how GST applies to your cloud kitchen or online food orders? Talk to our experts before choosing your registration or tax scheme.
Do Cloud Kitchens Need GST Registration in India?
Yes, a cloud kitchen may need GST registration in India, depending on its turnover, business model, and the nature of its supplies. A cloud kitchen should assess whether it crosses the applicable GST registration threshold or falls under any compulsory-registration provision.
For cloud kitchens operating through Swiggy, Zomato or other e-commerce operators, GST treatment can differ from direct sales because specific provisions apply to restaurant services supplied through e-commerce operators.
How Cloud Kitchens Are Classified Under GST?
Cloud kitchens fall under SAC 9963 as “restaurant service,” the same category covering dine-in restaurants, messes, and canteens, regardless of the fact that there’s no dining area at all. This classification matters because it fixes the rate at 5% without ITC in almost every case, rather than treating cloud kitchens as a separate, more favourable or unfavourable category. The only exception is a restaurant within “specified premises”. Since 1 April 2025, this is based on the actual value of supply of accommodation (not the older “declared tariff” concept) exceeding ₹7,500 per unit per day in the preceding financial year, or a hotel that voluntarily opts in via declaration. Taxed at 18% with full ITC instead, this rarely applies to a standalone delivery-only kitchen.
GST Registration for Cloud Kitchens
Registration follows the standard threshold: mandatory once aggregate turnover crosses ₹20 lakh (₹10 lakh in special category states), just like any other business. A common misconception is that selling exclusively through Swiggy or Zomato triggers mandatory registration regardless of turnover, since Section 24 normally requires registration for anyone supplying through an e-commerce operator. However, since restaurant services through an ECO fall under Section 9(5), where the platform pays the tax, CBIC has clarified that this compulsory-registration trigger doesn’t apply to such cloud kitchens; the normal turnover threshold still governs.
GST Rates: 5% vs 18%
Almost every cloud kitchen charges 5% GST without ITC on its food supplies, whether delivered directly or through an app. The 18% rate with ITC only applies to restaurants within specified premises, which excludes nearly all cloud kitchens by definition. Where a cloud kitchen also sells packaged or branded items, bottled sauces, merchandise, or retail packs, those are taxed at their own applicable GST rate rather than the 5% restaurant rate, so a single order can genuinely involve more than one rate.
Input Tax Credit (ITC) Rules
The 5% rate comes at a real cost: no ITC on raw materials, packaging, kitchen rent, equipment, or marketing spend, making cloud kitchens structurally different from most other GST-registered businesses. This isn’t optional; it’s a fixed condition attached to the 5% restaurant rate, not a choice the kitchen makes. The only way to access ITC is the 18% specified-premises category, impractical for the vast majority of delivery-only operations, so most cloud kitchens simply factor the unclaimed input tax into their pricing.
E-commerce Operator (ECO) Rules Under Section 9(5)
Since January 2022, restaurant services supplied through an e-commerce operator are taxed differently at the point of collection. The ECO, not the cloud kitchen, becomes liable to pay 5% GST on that order, treated as if it were the supplier, and must pay this in cash rather than through its own ITC. The cloud kitchen doesn’t charge GST on its invoice for these orders, and the ECO raises a separate invoice for the restaurant service component. TCS under Section 52, which otherwise applies to e-commerce sales, doesn’t apply here, since liability has already shifted entirely to the platform.
Want to know how to get FSSAI registration for your cloud kitchen? Read our detailed guide: How to Get FSSAI Registration for Cloud Kitchen.
How to Report ECO Orders in Your Own GST Return?
Even though the cloud kitchen doesn’t pay GST on orders routed through Swiggy or Zomato, these supplies still need separate reporting, not silence. The cloud kitchen reports them in Table 3.1.1(ii) of GSTR-3B (distinct from regular taxable supplies in Table 3.1(a)), and in Tables 14/15 of GSTR-1, which auto-populate into GSTR-3B. Leaving 9(5) supplies unreported, or lumping them into regular sales figures, creates a mismatch between what the platform reports on its side and what the kitchen reports on its own, a common source of reconciliation issues during audit.
Composition Scheme: Why Most Cloud Kitchens Can’t Use It?
Section 10 offers a composition scheme for restaurants with turnover up to ₹1.5 crore, letting them pay a flat 5% on turnover with simpler quarterly filing. The catch is that a registered person supplying through an e-commerce operator otherwise required to collect TCS is excluded from composition eligibility, and this exclusion is applied to restaurants selling via Swiggy or Zomato in standard practice, even though the Section 9(5) mechanism technically bypasses TCS. In effect, a cloud kitchen that wants to sell through a major delivery app needs to be on the regular scheme, not composition.
Section 10(2)(d) excludes composition eligibility specifically for supply “through an electronic commerce operator who is required to collect tax at source under Section 52”, and restaurant supplies under Section 9(5) are explicitly excluded from TCS collection. This has led to a genuine, unresolved debate on whether composition-scheme restaurants should remain eligible when supplying only 9(5)-covered restaurant services through an aggregator. In practice, however, most platforms and standard compliance guidance still treat aggregator tie-ups as disqualifying, so treat this as a real interpretive grey area worth professional advice on, not a settled “yes.”
Penalties and Consequences
Operating past the registration threshold without registering attracts penalty and interest on unpaid tax, plus the tax itself once discovered. Wrongly claiming ITC on inputs while charging the 5% restaurant rate is a common audit finding that leads to reversal with interest, and cloud kitchens that mix packaged retail sales with food service without separating rates correctly on invoices often face scrutiny during GST audits or ECO reconciliation checks.
Common Mistakes
- Assuming ITC is available on raw materials and packaging just because the business is GST-registered
- Believing exclusive reliance on Swiggy or Zomato forces mandatory registration below the turnover threshold
- Trying to opt into the composition scheme while still selling through a food delivery app
- Not separating GST rates correctly when a single order includes both food and a retail or packaged item
- Assuming the cloud kitchen must charge GST on the invoice for orders routed entirely through an ECO
- Overlooking commission GST charged by Swiggy or Zomato at 18%, which is a separate input the kitchen pays but can’t set off against its own 5% output
Practical Scenario
A Hyderabad-based cloud kitchen selling biryani exclusively through Swiggy and Zomato assumed it needed to register for GST the moment it onboarded, regardless of its actual turnover. Its accountant clarified that since restaurant orders through these platforms fall under Section 9(5), the compulsory e-commerce registration trigger didn’t apply, and registration only became necessary once turnover crossed ₹20 lakh a few months later. Once registered, the kitchen correctly excluded ITC on ingredients and packaging while paying 5% on its own direct website orders, and confirmed Swiggy and Zomato were separately remitting 5% GST on platform orders without any GST line appearing on the kitchen’s own invoices for those sales.
Expert Tips and Best Practices
- Track direct orders and ECO orders separately in your accounting, since the GST treatment differs for each
- Don’t assume the 5% rate lets you skip GST registration if your actual turnover crosses the threshold
- Reconcile the GST reported by Swiggy or Zomato on platform orders against your own sales records periodically
- If selling packaged or branded items alongside food, bill them at their correct rate, not the blanket 5% restaurant rate
- Reassess composition eligibility carefully before signing up with any aggregator, since it’s usually a one-way decision
GST Treatment: Direct Orders vs Orders Through an ECO
| Aspect | Direct Orders (Website/Phone) | Orders Through Swiggy/Zomato |
| GST liability | Cloud kitchen itself | E-commerce operator, under Section 9(5) |
| Rate charged | 5%, no ITC | 5%, paid by ECO, no ITC |
| Invoicing | Cloud kitchen raises the invoice | ECO raises a separate invoice for the restaurant service |
| TCS under Section 52 | Not applicable | Not applicable, since 9(5) liability replaces it |
Latest Legal Updates
The GST rate rationalisation effective from 22 September 2025 removed the 12% slab altogether, but restaurant services, including cloud kitchens, remain unaffected at 5% without ITC, since they were never in the 12% bracket. What has changed for some cloud kitchens is the rate on packaged or branded items sold alongside food, since products that previously sat at 12% have generally moved into the 5% or 18% bands under the restructured slabs, so it’s worth rechecking rates on any retail-style products on your menu.
How Kanakkupillai Can Help?
Kanakkupillai helps cloud kitchens get GST registration right from day one, structure invoicing correctly for both direct and ECO-routed orders, and stay clear of composition scheme traps once an aggregator tie-up is in place. We also assist with reconciling platform-remitted GST against your own records and advising on rate classification when packaged or branded products are part of your menu.
Conclusion
GST for cloud kitchens looks complicated mainly because two systems, direct sales and aggregator sales, run side by side with different liability holders. Once you separate the two clearly, the rules are fairly consistent: 5% without ITC almost always applies, the platform pays tax on its own orders, and composition simply isn’t compatible with life on Swiggy or Zomato. Getting this structure right from the outset avoids messy reconciliation and unwanted attention during a GST audit.
Running a cloud kitchen and unsure about GST registration, rates or ITC?
Get expert assistance with GST registration and ongoing compliance for your food business.
Frequently Asked Questions
1. Do cloud kitchens charge 18% GST like other restaurants in hotels?
No, the 18% rate only applies to restaurants operating within specified premises, meaning hotels with a declared room tariff above ₹7,500 a night. Nearly all cloud kitchens fall under the standard 5% without ITC rate instead.
2. Does selling only through Swiggy or Zomato mean I must register for GST regardless of turnover?
No, CBIC has clarified that the compulsory registration trigger for e-commerce sellers doesn’t apply to restaurant services covered under Section 9(5), since the platform pays the tax rather than collecting TCS. Registration is still based on the standard ₹20 lakh turnover threshold.
3. Can a cloud kitchen claim ITC on ingredients and packaging?
No, the 5% GST rate on restaurant services comes without input tax credit, so ITC on raw materials, packaging, rent, and equipment can’t be claimed. This applies uniformly regardless of order source.
4. Who is responsible for paying GST on orders placed through Swiggy or Zomato?
The e-commerce operator itself is liable to pay 5% GST on such orders under Section 9(5) of the CGST Act, not the cloud kitchen. The platform must pay this in cash and raise a separate invoice for the restaurant service.
5. Can a cloud kitchen opt for the GST composition scheme?
Generally no, since supplying through an e-commerce operator like Swiggy or Zomato is treated as disqualifying a business from the composition scheme in standard practice. Cloud kitchens tied to major delivery apps typically need to remain on the regular GST scheme.
6. Does the 2025 GST rate rationalisation change anything for cloud kitchens?
The core 5% without ITC rate for restaurant services remains unchanged, since it was never part of the discontinued 12% slab. However, packaged or branded items sold alongside food may have shifted rates, so those should be rechecked separately.
