GST on Cloud Kitchens and Food Delivery Platforms: Calculator-Friendly Guide with Worked Example
Cloud kitchens and food aggregator platforms (Swiggy, Zomato) operate under a layered GST structure that changed significantly when the Government made.ors liable to collect and pay GST on restaurant services. This guide explains who pays what GST, how input tax credit flows, and provides a worked calculation for a typical cloud kitchen operator.
GST Rate on Food Services
| Supplier Type | GST Rate | ITC Available? |
|---|---|---|
| Restaurant (standalone, turnover < âš1.5Cr, composition) | 5% (no ITC) | No |
| Restaurant (regular GST, outdoor catering) | 5% on food supply (no ITC on input services/capital goods) | Limited |
| Cloud kitchen (no dine-in) â regular taxpayer | 5% on food supply (no ITC) | No (blocked for restaurant services) |
| MICE/catering in hotel (room tariff > âš7,500) | 18% with full ITC | Yes |
| Packaged food manufacturer (not restaurant) | 0%â18% based on HSN | Yes (full ITC) |
GST on Food Delivery Platforms: Section 9(5), Not TCS
From January 2022, food aggregators (Swiggy, Zomato, etc.) became liable to pay GST on restaurant services supplied through their platforms, under Section 9(5) of the CGST Act â a notified-services reverse-mechanism that makes the ECO the deemed supplier. This is a separate mechanism from the Section 52 TCS (tax collected at source) that aggregators apply to other goods/services. Key mechanics:
- The aggregator (Electronic Commerce Operator â ECO) charges and collects 5% GST from the customer on restaurant-service orders and deposits it with the government in cash (ITC cannot be used)
- The restaurant/cloud kitchen does not charge GST on orders placed through the aggregator platform â the ECO raises the invoice for that order
- For direct orders (own website, phone orders), the restaurant/cloud kitchen pays GST directly under normal forward charge
- TCS under Section 52 (currently 0.5% IGST or equivalent CGST+SGST) does NOT apply to restaurant-service orders covered by Section 9(5) â TCS only applies to other goods/services sold through the same or other ECOs
- The aggregator charges 18% GST on its own delivery commission/service fee â this is generally not creditable for the restaurant since restaurant-service ITC is blocked at 5%
Worked Example: Cloud Kitchen Monthly GST Calculation
Case Study: SpiceBox Cloud Kitchen, Hyderabad
SpiceBox earns âš5L via Swiggy/Zomato and âš3L via direct orders (WhatsApp, own website). GST on Swiggy/Zomato orders is collected and remitted by the aggregators. SpiceBox must handle GST on the âš3L direct orders only.
SpiceBox reports the âš5L aggregator turnover in GSTR-1 under the dedicated ECO-supplies table for Section 9(5) restaurant services (Table 8/14(b), depending on the return-period format) â this turnover does not add to SpiceBox's own GSTR-3B tax liability since the ECO has already paid that GST. The âš3L direct orders go in the normal B2C/B2B outward-supply tables (Table 7/4A) with 5% GST payable by SpiceBox. Commission paid to the aggregator (âš50,000 Ã 18% = âš9,000 GST) is also not creditable due to the restaurant ITC block.
Registration Threshold for Cloud Kitchens
Section 24(ix) of the CGST Act mandates compulsory registration (regardless of turnover) for persons supplying goods or services through an ECO where the ECO is required to collect TCS under Section 52. Restaurant service supplied through an ECO, however, is taxed differently â it falls under Section 9(5), where the ECO itself pays the GST as deemed supplier. As clarified in Circular 167/23/2021-GST, suppliers whose restaurant-service supplies are entirely routed through Section 9(5) ECOs can still avail the normal âš20 lakh (âš10 lakh for special category states) turnover exemption â compulsory registration under Section 24(ix) applies to the TCS category, not automatically to Section 9(5) restaurant services. In practice, most cloud kitchens cross âš20L quickly and register anyway, but a very small home-baker operation supplying only via Swiggy/Zomato with turnover genuinely below the threshold is not legally compelled to register purely because of that platform sale.