Restaurants sit under a special GST rule most other businesses don’t: the service is taxed at 5% but you cannot claim input tax credit on your purchases. That single trade-off drives every pricing and compliance decision a restaurant, café or cloud kitchen in Gujarat makes — and food-delivery platforms add another layer on top.
The 5%-without-ITC rule
Most standalone restaurants — dine-in, takeaway, cafés and cloud kitchens — charge GST at 5% (2.5% CGST + 2.5% SGST) on the food bill. In return, they cannot claim input tax credit on rent, raw materials, equipment or commissions. This is deliberate: the low rate is meant to be simple, not credit-based. The exception is a restaurant inside a hotel where any room tariff is ₹7,500 or more per night — that restaurant charges 18% and can claim ITC.
Swiggy, Zomato and food-delivery GST
Since January 2022, food-delivery platforms (e-commerce operators) are liable to pay the 5% GST on restaurant service supplied through them, directly to the government. Practically, this means the platform collects and pays the tax on those orders — but you still report the sales correctly in your returns, and the treatment of dine-in vs platform orders differs. Getting this split right in GSTR-1 and GSTR-3B is where cloud kitchens most often need help.
The restaurant composition option
A restaurant with turnover up to ₹1.5 crore can opt for the composition scheme and pay 5% on turnover with minimal quarterly filing (CMP-08) — but it cannot make inter-state supplies or sell through e-commerce platforms under this scheme. For a purely local dine-in restaurant this can be simpler; for anyone on Swiggy/Zomato it usually isn’t an option. We’ll tell you which fits.
What we handle for restaurants
- GST registration for the restaurant, café or cloud kitchen — ₹499
- Advice on 5%-without-ITC vs composition vs the 18% hotel case
- Correct reporting of dine-in vs Swiggy/Zomato orders in monthly returns
- Monthly GSTR-1 + GSTR-3B filing at ₹499/month with free billing software
- Handling of any e-commerce operator reconciliation