Cloud kitchen GST in India: the rate, the SAC code and who pays on app orders

For years cloud kitchen owners asked whether a kitchen with no dining room counts as a restaurant. CBIC answered in Circular 164/20/2021-GST, dated 6 October 2021, after the 45th GST Council meeting: cooking and supplying food, even only as takeaway or door delivery, is restaurant service. So cloud kitchens and central kitchens pay 5% GST without input tax credit (ITC).

• On a bill inside your state that is CGST 2.5% + SGST 2.5%.
• Without ITC means you can't claim back the GST you paid on rent, packaging, gas or equipment.
• The 18% rate applies only to restaurants at "specified premises" (hotels that charged more than ₹7,500 a night for a room last year, or that opted in). A cloud kitchen is almost never one.

Example: Swaad Kitchen delivers a Paneer Butter Masala and two rotis for ₹400 from its own order link. GST is ₹20 (₹10 CGST + ₹10 SGST), and the bill total is ₹420.

GST uses SAC codes for services. Restaurant service, including takeaway and door delivery of food, is SAC 996331 in CBIC's scheme of classification. Because Circular 164 treats a cloud kitchen as restaurant service, the same code applies.

People often search for an "HSN code" for a cloud kitchen. HSN codes are for goods; what you supply is a service, so you use the SAC. Our restaurant GST bill format guide shows where SAC 996331 sits on a bill and when it is required.

Since 1 January 2022, restaurant service sold through an e-commerce operator (a food delivery app) is notified under Section 9(5) of the CGST Act (Notification 17/2021-Central Tax (Rate)). That means:

• Orders through a delivery appThe app collects and pays the 5% GST on the food. You don't pay GST again on those orders. CBIC's Circular 167/23/2021-GST says registered kitchens report these sales in Table 8 of GSTR-1 and Table 3.1(c) of GSTR-3B.
• Orders on your own link, phone or counterYou charge the 5% GST on your bill and pay it in your own return.
• App sales still count in your turnoverCircular 167 says sales made through apps are part of your aggregate turnover, including for the registration threshold.

So the more orders come in on your own online ordering link, the more of your sales you bill and pay GST on yourself. Your billing software has to keep the two apart.

Under Section 22 of the CGST Act, a supplier must register once aggregate turnover in a financial year crosses ₹20 lakh (₹10 lakh in special category states). Because app sales count in that turnover, add your app sales and your own sales together.

Section 24 lists cases where you must register even below the limit, such as some inter-state supplies. If you sell through apps or across a state border, ask your CA whether one applies to you. A kitchen also needs FSSAI registration or a licence; our FSSAI licence guide covers which one.

The 57th GST Council met on 8 October 2026. Two of its recommendations touch kitchens:

• Limited ITC in the same line of business for restaurant and outdoor catering services, in the same way as it works today for passenger transport and tour operators.
• An amendment to Section 9(5) to make clear that the app pays the tax on notified services whatever its business model.

These are recommendations. They change nothing until the law is amended and notifications are issued. Until then, keep billing at 5% without ITC. We will update this page when the notifications come out.

• Every own order gets a GST billGSTIN, FSSAI number, bill number in the financial-year series, CGST and SGST shown separately.
• Keep app and own sales apartYour accountant needs them separately for GSTR-1 and GSTR-3B.
• Price with the 5% in mindGST comes on top of the menu price unless you show prices including GST. Our food cost formula guide helps you set prices.

POSBADA prints GST bills with your GSTIN and FSSAI number, sends a fresh KOT to the kitchen for every order (see KOT software), and runs your own online shop for delivery and pickup at 0% commission.