Composition scheme under GST

A restaurant offering takeaway and food delivery through platforms like Zomato and Swiggy can generally opt for the Composition Scheme under GST, provided they meet the other statutory eligibility criteria.

Key Clarification: The "E-commerce" Restriction

Under Section 10(2)(d) of the CGST Act, a registered person is typically ineligible for the Composition Scheme if they supply services through an e-commerce operator required to collect Tax Collected at Source (TCS) under Section 52.

However, food delivery services provided through platforms like Zomato and Swiggy fall under Section 9(5) of the CGST Act. Under this provision, these platforms are considered "deemed suppliers" and are responsible for collecting and depositing the 5% GST on the food supplied through them. Because the tax collection responsibility shifts to the platform (and they are not required to collect TCS on these specific restaurant services), the restriction regarding e-commerce operators under Section 10(2)(d) does not disqualify the restaurant from the Composition Scheme.

Eligibility Checklist

To remain eligible for the Composition Scheme, your client must ensure they satisfy these core conditions:

• Turnover Limit: The aggregate turnover in the preceding financial year must not exceed ₹1.5 crore (or ₹75 lakh in special category states).

• No Inter-State Supply: The restaurant must not engage in any outward inter-state supply of goods or services.

• No Non-Taxable Goods: The business cannot supply items not taxable under GST (e.g., alcoholic liquor for human consumption).

• No ITC Claims: They cannot claim any Input Tax Credit (ITC) on their purchases.

• Tax Invoicing: They cannot collect tax from customers. Instead of a tax invoice, they must issue a "Bill of Supply" and prominently mention "Composition taxable person, not eligible to collect tax on supplies" on their signboards and bills.

• Same PAN Rule: All businesses registered under the same PAN must opt for the Composition Scheme; you cannot have one part of the business in the regular scheme and another in the Composition Scheme.

Important Note on Reporting

Since January 2022, Swiggy and Zomato handle the GST for orders placed through their platforms. For your client, this means:

• Platform Sales: These sales are reported by the aggregator under Section 9(5) and should generally not be included in the restaurant's outward taxable supplies in their own GSTR-3B filings to avoid double reporting.

• Direct Sales: Any walk-in, takeaway, or direct website/app orders handled directly by the restaurant are considered their own direct supplies and must be accounted for by the restaurant under the Composition Scheme.