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Before, we could only enjoy eating out at restaurants with our loved ones. But now, thanks to technology, we can have delicious food delivered right to our doorstep through zomato or swiggy or by calling. Especially after the pandemic, more people prefer eating at home because it’s safer and more convenient. That’s why cloud kitchens, which are kitchens that only prepare food for delivery, have become popular. However, starting a cloud kitchen isn’t easy. There are rules to follow like Food licence (FSSAI certificate), Shop licence,GST registration, Income tax, Fire and safety licence. This article talks about what cloud kitchens are, the GST registration requirement you need to know before starting on.
Understanding GST for Cloud Kitchens
First things first, what exactly is GST and why do you need it for your cloud kitchen? GST stands for Goods and Services Tax, a unified tax system implemented in India that replaced various indirect taxes. Whether you’re selling food online or offline, GST registration is mandatory if your sales turnover exceeds a particular limit.
Is GST registration required for cloud kitchen?
GST registration is mandatory if your sales turnover exceeds the limit of Rs. 40 lakhs. But eventhough your sales do not exceed this limit you may still be required to get GST registration if you want to register with Zomato or Swiggy or any other food delivery platform. Alongwith GST you require FSSAI licence, Shop licence and Fire safety licence in case you wish to register with zomato and swiggy.
What is GSTIN?
GSTIN, or Goods and Services Tax Identification Number, is a unique 15-digit alphanumeric code assigned to every registered taxpayer under the GST regime in India. This number serves as a primary identifier for businesses registered under GST, facilitating seamless tax administration and compliance. GSTIN contains details such as the state code, PAN number of the taxpayer, entity code, and a check digit, enabling authorities to track transactions, verify authenticity, and ensure smooth interstate trade within the GST framework.
Documents and information Required for GST Registration for Cloud kitchen
- Business Name
- Business Start Date if available
- Mobile Number and Email
- PAN Card
- Aadhar Card
- Proof of business registration (e.g. FSSAI licence, Shop licence,etc) (Optional)
- Passport size Photo
- Google map exact location of business & residence
- Electricity Bill or Property tax bill (Latest) as business address proof
- Ownership Document like Index 2/Sale deed (if owned) or Rent Agreement (if rented) or NOC from owner (if consent arrangement or shared property) as business address proof
- Make sure Mobile Number is Linked to Aadhar
GST registration documents for Partnership firm
How to Register Your Cloud Kitchen for GST
01. Check Eligibility
Ensure your cloud kitchen meets the eligibility criteria for GST registration. As of the latest regulations, businesses with an annual turnover exceeding Rs. 40 lakhs for goods (Rs. 10 lakhs for northeastern states) are required to register under GST.
02. Gather Documents
Before initiating the registration process, keep the above mentioned documents handy
03. Online Registration
Head over to the official GST portal and navigate to the registration tab. Fill in the required details accurately with all necessary attachments. Make sure to include your business name, PAN, email ID, and mobile number. Complete Aadhar authentication from the email link.
04. Verification
You'll receive an application reference number (ARN) via email or SMS. Next, your application will be verified by a GST officer. This may involve scrutiny of your documents or additional information if required.
05. GSTIN Allotment
Once the verification process is complete and everything checks out, you'll receive your unique Goods and Services Tax Identification Number (GSTIN). This number is your identity for all GST-related transactions.
06. Open Bank A/c
Once you recieve GST certificate, open a current account with any bank within 30 days and add the bank details in GST profile to avoid suspension of GST registration.
GST rates for Cloud Kitchen and Restaurant services
Following the introduction of GST on food services, restaurants are now subject to a 5 % GST rate without Input tax credit (ITC) which is nothing but GST credit that you can claim when you purchase from a GST registered business. They have another option to charge 18% GST with Input Tax Credit (ITC).
The GST rates applicable for cloud kitchen is 5% without ITC or 18% with ITC. But the beneficial option is 5% without ITC as the complainces get easier and is beneficial. Below is the comprehensive list of applicable GST rates on restaurant services, covering beverages, food, and accommodation.
Services | GST Rates |
| Standalone restaurants with takeaway facility including both AC and non-AC restaurants (includes Cloud kitchen) | 5% without ITC |
| Food delivery service or standalone catering service | |
| Indian Railways or IRCTC catering service or licensees of IRCTC serving food at platforms or in trains | |
| Composite outdoor catering within hotel with room tariff less than Rs.7,500 | |
| Restaurants within hotels with room tariff less than Rs.7,500 | |
| Cafeteria, mess, or canteen operating on a contractual basis not for any event or occasion in school, college, office, or industrial unit, serving food or drinks | |
| Composite catering service in hotels with room tariff Rs.7,500 or more | 18% with ITC |
| Restaurants in hotels with room tariff Rs.7,500 or more | |
| Premises organising function or renting for events and providing food services | 18% |
| Food services provided in occasions, conferences, events, exhibitions, and indoor or outdoor function |
GST Rate on Various Food Items
The following are the GST rates on popular food items and the list is not exhaustive.
| Particulars | GST Rate |
| fresh and/or chilled vegetables | Nil |
| frozen vegetables | |
| dried leguminous vegetables other than pre-packaged and labelled | |
| fresh/dried coconuts, grapes, apples, bananas, and pears, among others | |
| fruits like grapes, apples, bananas, pears, mangoes, citrus fruits, and berries, among others | |
| fresh milk, pasteurised milk (excluding UHT milk), and milk and cream (not concentrated nor contains added sugar or sweeteners) | |
| curd, lassi, and buttermilk, other than pre-packaged and pre-labelled | |
| fresh or chilled meat and fish | |
| birds’ eggs in shells | |
| rice other than pre-packaged and labelled | |
| wheat or meslin (i.e. maize flour) other than pre-packaged or labelled | |
| rye other than pre-packaged and labelled | |
| dried vegetables that are packaged and labelled | 5% |
| dried leguminous vegetables that are pre-packaged and labelled | |
| milk and cream that is concentrated or contains added sugar or sweeteners | |
| curd, lassi, and buttermilk that is pre-packaged and pre-labelled | |
| yoghurt and cream, whether containing sugar/flavouring or not | |
| meat that is packaged and labelled | |
| birds’ eggs which are not in a shell | |
| rice, pre-packaged and labelled | |
| wheat or meslin, pre-packaged and labelled | |
| rye, pre-packaged and labelled | |
| cereal flours other than of wheat or meslin, rye, etc., pre-packaged and labelled. | |
| vegetables, fruits, nuts, and edible plant parts that are preserved using sugar | 12% |
| fruits, nuts, and edible plant parts that are preserved and/or prepared using vinegar and/or acetic acid. | |
| chocolate and food preparations containing cocoa | 18% |
Benefits of GST Registration for Cloud Kitchen
Before we get into the process, let’s quickly skim through the benefits of GST registration for your cloud kitchen:
- Legitimacy: GST registration lends credibility to your cloud kitchen business.
- Input Tax Credit (Purchase GST) : You can claim input tax credit on the GST paid on your inputs like food items, kitchen utensils, microwave oven, etc which helps reduce overall costs. But cloud kitchens won’t be able to claim GST on purchases if they choose to charge GST at 5% on sales without the benefit of setting off ITC on purchase.
- Compliance: Being GST-compliant ensures smooth operations without the fear of penalties or legal repercussions.
- Expansion Opportunities: With GST registration, you can expand your market reach by selling across states without any hassle.
What after getting GST registration?
File Returns: After GST registration, you’re required to file regular GST returns like GSTR 1 and GSTR 3B, detailing your business transactions and tax liabilities. Ensure timely filing to avoid penalties.
Tax Invoicing: Issue GST-compliant tax invoices for your cloud kitchen, including all requisite details such as GSTIN, invoice number, date, and itemized charges.
Record Keeping: Maintain proper records of all your business transactions, including sales, purchases, invoices, and tax payments. .
Conclusion
In this guide we learnt about what is GST, GST registration requirement, GST rates on sale, GST on various food items, benefits, Documents required and how to register for GST for cloud kitchen.
You can contact us at +91 9769647582, if you have any query or require GST registration service.
Frequently Asked Questions (FAQs)
Yes, GST registration is mandatory if your cloud kitchen’s annual turnover exceeds the prescribed threshold limit, which is currently set at Rs. 40 lakhs (Rs. 10 lakhs for northeastern states).
Essential documents include PAN card of the business owner, Aadhaar card, proof of business registration, address proof of the business premises, Passport size photograph.
Yes, you can register for GST online through the official GST portal. The process involves filling out the GST REG-01 form with accurate details and submitting the necessary documents.
The registration process typically takes around 7-10 working days, provided all the documents are in order and there are no discrepancies in the application.
GSTIN (Goods and Services Tax Identification Number) is a unique identification number assigned to GST-registered businesses. It is crucial for all GST-related transactions, including invoicing, filing returns, and claiming input tax credit.
Yes, there are penalties for non-compliance with GST regulations. Failure to register under GST when required can lead to penalties ranging from a monetary fine to legal repercussions, which may adversely affect your cloud kitchen business.
Yes, GST-registered businesses, including cloud kitchens, are required to file GST returns regularly. The frequency of return filing depends on the type of registration and turnover of the business.
Yes, GST registration allows you to sell your cloud kitchen products across states without any hassle. It streamlines inter-state transactions and ensures compliance with tax regulations.
You can update your GST registration details, such as business name, address, or contact information, through the GST portal by filing the necessary amendments using the GST REG-14 form.
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