GST on Cloud Kitchen Services and Food Delivery Operations
With the rise of platforms like Swiggy, Zomato, and Uber Eats, cloud kitchens—also known as virtual or ghost kitchens—have transformed the food industry. But how does GST (Goods and Services Tax) apply to this digital-first model? Whether you’re a cloud kitchen operator or an aggregator platform, understanding the gst on cloud kitchen operations is crucial for compliance and pricing.
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What Is a Cloud Kitchen?
A cloud kitchen is a commercial kitchen that prepares food exclusively for delivery without offering dine-in services. Orders typically come via:
- Food aggregator apps (Zomato, Swiggy)
- Direct orders through the restaurant’s website or app
- Third-party logistics or delivery partners
Though the operations are virtual, GST registration and compliance are mandatory once the turnover threshold is exceeded.
GST Rate for Cloud Kitchen Services
| Service Type | GST Rate | HSN/SAC Code |
|---|---|---|
| Food supplied by cloud kitchen (delivery/takeaway) | 5% | 9963 |
| Packaged/branded food items | 12% or 18% | Varies |
| Aggregator/platform commission (Swiggy, Zomato) | 18% | 9983 |
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GST for Cloud Kitchen on Direct Orders
If a cloud kitchen takes orders directly (via website, WhatsApp, or phone):
- Must be registered under GST if turnover exceeds ₹20 lakh
- Must charge 5% GST on food invoices
- Cannot claim Input Tax Credit under 5% scheme
Input Tax Credit (ITC) for Cloud Kitchens
| GST Rate Type | Input Tax Credit Eligibility |
|---|---|
| Charging 5% GST | Not allowed |
| Charging 18% GST (on packaged/bundled items) | Input Tax Credit (ITC) allowed |
Most cloud kitchens opt for the 5% GST structure due to ease of compliance, but it disallows ITC on expenses like:
- Raw materials and ingredients
- Packaging supplies
- Kitchen rentals and equipment
- Marketing or advertising services
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Understanding the gst on cloud kitchen services helps food business owners, aggregators, and consumers make informed decisions. Whether you run a single-kitchen setup or multiple online brands, staying GST-compliant is key to scaling your food delivery operations smoothly.
I am a chartered accountant with over 14 years of experience. I understand income tax, GST, and balancing financial records. I analyze financial statements and tax codes effectively. However, I also have a passion for writing, which is different from working with numbers. Recently, I started writing articles and blog posts. My goal is to make finance easier for everyday people to understand.
Frequently Asked Questions (FAQs)
- What is the gst rate for cloud kitchens in India?The rate is 5%, the same as for standard restaurants, without ITC.
- Do Swiggy and Zomato collect GST on behalf of cloud kitchens?Yes. As per new rules, food aggregators collect 5% GST from customers and pay it to the government directly.
- Can cloud kitchens claim input tax credit?No, if charging 5%. They lose ITC eligibility on expenses like packaging, raw materials, and rent.
- What if the cloud kitchen sells packaged goods?In that case, 12% or 18% GST may apply depending on the product, and ITC is allowed.
- Is GST applicable if the kitchen sells through its own app?Yes. GST at 5% applies if turnover exceeds ₹20 lakh annually.
