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Listing Your Restaurant on Swiggy & Zomato: A Complete Tax Compliance Guide (2025 Update)

Introduction

The online food delivery business is booming in India, with Swiggy and Zomato leading the market. For restaurant owners, listing on these platforms increases visibility and sales. However, it also comes with tax compliance responsibilities, including GST, TCS, and income tax reporting.

If you’re planning to list your restaurant on Swiggy or Zomato in 2025, this guide will help you understand:
 GST registration requirements
 How Swiggy/Zomato handle GST on food sales
 TCS deductions and input tax credit (ITC)
 Income tax implications for restaurant earnings
 Key documents required for tax compliance

1. GST Registration: Is It Mandatory for Restaurants?

Under the GST Act, all businesses must register for GST if:

  • Turnover exceeds ₹20 lakh per year (₹10 lakh for northeastern states).
  • They are supplying food via an e-commerce operator (Swiggy/Zomato), irrespective of turnover.

 Important Update (2022 Rule Change):

  • Even if your restaurant turnover is below ₹20 lakh, Swiggy/Zomato automatically deducts GST at 5% on all food orders.
  • This means your restaurant does not need to collect GST separately, but you must still register for GST to claim input tax credit (ITC).

 Best Practice: Register for GST even if turnover is below ₹20 lakh to claim ITC on purchases like raw materials, packaging, and rent.

2. How GST Works for Online Food Delivery?

Who Pays GST on Online Orders?

Before January 2022, restaurants collected 5% GST from customers. However, the government made a major change:

  • Now, Swiggy & Zomato collect and deposit GST directly at a flat 5% rate on all food sales.
  • Restaurants do not need to charge GST separately on delivery orders.

 Example:

  • A customer orders ₹1,000 worth of food from a restaurant.
  • Swiggy/Zomato collects 5% GST (₹50) from the customer and deposits it with the government.
  • The restaurant receives ₹950 (minus Swiggy/Zomato commission & TCS deductions).

Impact on Restaurants:

  • No need to file GSTR-1 for food delivery sales.
  • However, GST must still be collected separately for dine-in customers at 5% (without ITC) or 18% (with ITC).

 Best Practice: Keep separate records for dine-in sales (self-collected GST) and online sales (Swiggy/Zomato GST deductions).

3. TCS Deduction by Swiggy/Zomato: What You Need to Know

Swiggy & Zomato deduct 1% Tax Collected at Source (TCS) under GST Section 52 before paying restaurants.

How TCS Works?

  • If a restaurant makes ₹5 lakh in sales via Swiggy/Zomato, the platform will:
    • Deduct 1% GST TCS (₹5,000)
    • Deposit it to the government under GSTR-8 filing
    • Pay the remaining ₹4,95,000 to the restaurant (minus other platform charges)

 How to Claim TCS in Your GST Return?

  • The TCS credit appears in GSTR-2A under “TCS Collected by E-Commerce Operators.”
  • You can claim this as an input credit while filing GSTR-3B, reducing your GST payable.

 Best Practice: Regularly reconcile TCS deducted (GSTR-8) with your GST returns to avoid tax mismatches.

4. Income Tax Compliance for Restaurants on Swiggy/Zomato

Apart from GST, restaurants must report their Swiggy/Zomato earnings as business income under ITR-3 (for proprietors) or ITR-5 (for partnership firms/LLPs).

Tax Deduction at Source (TDS) on Payments

  • If Swiggy/Zomato pays a restaurant more than ₹30 lakh per year, they deduct 1% TDS under Section 194O.
  • Restaurants can claim credit for this TDS while filing ITR.

 Example:

  • Annual sales on Swiggy/Zomato = ₹40 lakh
  • TDS deducted = 1% of ₹40 lakh = ₹40,000
  • This ₹40,000 can be adjusted against total tax payable when filing the ITR.

 Best Practice: Check Form 26AS for TDS deductions and claim them while filing income tax returns.

5. Key Tax Documents Required for Restaurant Owners

 For GST Compliance:

  • GST Registration Certificate
  • GSTR-3B and GSTR-1 filings
  • GSTR-2A for TCS credit verification

 For Income Tax Filing:

  • Profit & Loss Statement
  • Bank Statements showing Swiggy/Zomato payouts
  • TDS Certificates (Form 26AS)
  • Invoices for raw materials & restaurant expenses

 Pro Tip: Use accounting software like Tally, Zoho Books, or QuickBooks to keep track of Swiggy/Zomato sales, deductions, and tax credits.

FAQs on Restaurant Tax Compliance for Swiggy/Zomato

Q1: Do I need to register for GST if my restaurant turnover is below ₹20 lakh?

 Yes, if you list on Swiggy/Zomato, GST registration is mandatory due to e-commerce tax rules.

Q2: Do I have to charge GST separately for Swiggy/Zomato orders?

 No. Swiggy/Zomato charge and collect 5% GST on your behalf.

Q3: Can I claim input tax credit (ITC) on purchases?

 Yes, but only if you opt for 18% GST on dine-in sales. If you choose 5% GST, ITC is not allowed.

Q4: How do I claim TCS deducted by Swiggy/Zomato?

 TCS appears in GSTR-2A and must be claimed while filing GSTR-3B.

Q5: Do Swiggy/Zomato payments have TDS deductions?

 Yes, if total payments exceed ₹30 lakh per year, Swiggy/Zomato deduct 1% TDS under Section 194O.

Conclusion: Key Takeaways for Restaurant Owners

 GST Compliance:
 GST registration is mandatory for Swiggy/Zomato listings.
 5% GST is auto-deducted by Swiggy/Zomato on orders.
 Restaurants must track and claim 1% GST TCS.

 Income Tax Compliance:
 TDS @ 1% applies if Swiggy/Zomato payments exceed ₹30 lakh annually.
 Restaurants must report Swiggy/Zomato earnings under business income.
 All deductions should be verified in Form 26AS and claimed in ITR.

 Final Advice:

  • Keep separate records for dine-in and delivery sales.
  • Regularly reconcile TCS credits in GSTR-2A.
  • Consult a tax professional if handling large volumes of online sales.

By ensuring tax compliance, restaurants can maximize profits, avoid penalties, and smoothly run their online business.

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