Neha bakes premium cookies — single-origin chocolate, sea salt caramel, rosemary olive oil. She started with 200 customers on her personal Instagram during the pandemic. Today: 38k followers, three flavours featured on a food magazine cover, and a kitchen that runs five batches a day.
This FY's revenue: ₹35,40,000. About 60% are intra-Maharashtra sales (Pune, Mumbai, Nashik). 40% ship by courier to Delhi, Bengaluru, Hyderabad, Chennai. Average ticket size: ₹2,200. She accepts payment via Razorpay link and UPI.
She has no GST registration. Should she? And — if yes — at what rate, with what compliance, and starting when?
- Cookies are goods, not "restaurant service". HSN 1905 — taxable at 18% GST when packaged, sold under a brand name.
- For a goods supplier, GST registration is mandatory once aggregate turnover crosses ₹40 lakh (₹20L in special-category states). Neha is at ₹35.4L — close to the trigger.
- BUT — any inter-state supply triggers a separate compulsory registration question under Sec 24(i). For goods, the threshold relief generally still applies if total turnover is below ₹40L (the relief from compulsory registration was extended via Notif 56/2018 for goods up to ₹20L / ₹40L threshold). For services, Notif 10/2017-IT relaxed inter-state supplies up to ₹20L.
- Selling via your own Instagram / website / WhatsApp = you are the supplier. Selling via Swiggy / Zomato = the platform may collect under Sec 9(5).
- Once Neha registers, she has two routes: regular GST (18% with ITC) or composition (1% of turnover, no ITC, no inter-state).
Step 1 — what category is Neha in?
Indian GST has three relevant flavours of "food sold to consumers":
Packaged goods (Neha)
HSN 1905
Cookies / biscuits / cake / rusks sold packaged with a brand. Goods, 18% GST. Threshold for registration: ₹40L aggregate turnover (₹20L special-category states).
Restaurant service
SAC 9963
Food prepared and served for consumption on the premises or take-away. Service, 5% no-ITC (most cases) or 18% if in 5-star hotel. Threshold ₹20L. Through Swiggy/Zomato: ECO pays under Sec 9(5).
Loose / unbranded
Various HSN
Loose biscuits / loose bread / unbranded — typically 0% or 5%. The brand + packaging is what bumps the rate. "Pre-packaged + labelled" up to 25 kg attracts the standard rate even for basic items.
Neha is selling under her brand name "Neha Bakes", packaged in boxes. That's packaged goods, HSN 1905, 18% GST. Not restaurant service.
Step 2 — has she crossed the registration threshold?
Three things determine whether registration is mandatory.
"Aggregate turnover" includes all taxable, exempt, and exports — across all states under the same PAN. Neha's: ₹35.4L. Below ₹40L threshold — so the headline registration trigger hasn't fired yet.
Special-category states (Manipur, Mizoram, Nagaland, Tripura) and Uttarakhand have a ₹20L threshold for goods. Neha is in Maharashtra → ₹40L applies.
Sec 24 of CGST Act lists categories where registration is mandatory regardless of turnover. The relevant ones for Neha: (i) inter-state supplies of goods, (ix) supply through e-commerce operator (Swiggy, Zomato, Amazon).
For (i), Notification 56/2018-CT exempted inter-state supplies of goods up to ₹20L turnover from compulsory registration. Neha is above ₹20L → this exemption doesn't help her.
Because she's above ₹20L AND making inter-state supplies (40% of her sales go to Delhi/Bengaluru/Hyderabad/Chennai), the compulsory-registration trigger under Sec 24(i) has fired. She must register — not on the ₹40L threshold, but on the inter-state-supplies trigger.
If you ship even one packet of cookies to another state under your own GSTIN-less status — and your turnover is above ₹20L — you've technically crossed the Sec 24(i) compulsory-registration trigger. Many home-baker businesses learn this only at year-end. Better to register at ₹18-20L if inter-state shipping is part of the plan.
Step 3 — composition or regular GST?
Once Neha registers, she picks one of two regimes.
Composition (Sec 10)
Simple, but limited
1% of turnover (manufacturer-type — 0.5% CGST + 0.5% SGST). No invoice-with-tax. Quarterly CMP-08, annual GSTR-4. No ITC. No inter-state outward supplies. Turnover cap ₹1.5cr. Doesn't fit Neha because of inter-state ban.
Regular (Neha's pick)
Full ITC, full freedom
18% GST charged on each sale. Customer pays GST on top of cookie price. Monthly GSTR-1 + 3B (quarterly QRMP option for <₹5cr turnover). Claim ITC on flour, butter, packaging, courier — everything that has GST in it. Inter-state OK.
The actual math — does GST hurt Neha's pricing?
Neha sells a ₹2,200 box of 12 cookies. Pre-GST. If she registers and charges 18%, customer pays ₹2,596. Her margin doesn't change. But:
- She claims ITC on inputs — flour (5%), butter (12%), packaging boxes (18%), Razorpay charges (18%), courier (18%), Adobe subscription for designs (18%). Suddenly her costs drop by ~12-15%.
- Net effect: her realised margin goes UP, even though she charges customer more.
- The customer pays the GST, not her. She's just the collector.
For most products with significant input costs, registering for regular GST is actually margin-positive. Composition feels simpler but quietly costs you the ITC you can't claim.
Step 4 — what she actually does, week by week
- Apply on the GST portal — REG-01 form, PAN-linked. Address proof, bank details, photo. Approval typically 7-10 working days.
- Display GSTIN on Instagram bio, website, invoices. Every invoice must show: her name, address, GSTIN, buyer details (if registered), HSN 1905, taxable value, rate, tax, total. Invoice numbers must be sequential per FY.
- Issue tax invoice for every supply. For unregistered consumers (B2C), a single invoice per day or per order is fine.
- Charge IGST 18% for inter-state sales, CGST 9% + SGST 9% for intra-Maharashtra.
- File GSTR-1 by 11th of next month (outward supplies) and GSTR-3B by 20th (summary + payment). For <₹5cr turnover she can opt for the QRMP scheme: quarterly returns, monthly tax via PMT-06.
- Track ITC from purchases. Match against GSTR-2B before claiming. Most accounting software (Tally, Zoho, ClearTax) handle this.
What about Swiggy / Zomato / Amazon?
If Neha lists her cookies on Swiggy, Zomato, BigBasket, Amazon Pantry, or any ECO (e-commerce operator), three things shift:
- Sec 24(ix) — compulsory registration regardless of turnover. Once you sell on Swiggy / Amazon, you must be GSTIN-registered.
- TCS by ECO under Sec 52 — Amazon / Swiggy / Zomato deduct 0.5% TCS on your net taxable supplies through the platform and remit to government against your GSTIN. You claim this as ITC in your own GSTR-3B.
- For restaurant-type supplies through Swiggy/Zomato, the ECO itself pays GST under Sec 9(5) on a "restaurant service" — but this is for prepared meals delivered to consumers, not packaged cookies. Neha's cookies still go through normal goods-supply rules.
The funny bit — why this category trips up everyone
The Indian GST law is excellent at handling "factory makes biscuits → wholesaler distributes → retailer sells" — neat invoice chain, ITC flows smoothly. It struggles with "a person bakes from home → ships nationwide via courier → gets paid by UPI". The categories were drawn pre-Instagram. Today, the same person can be: home baker (goods, 18%), running a delivery kitchen (restaurant service, 5% no-ITC), and selling MRP biscuits through Amazon (goods, 18% + TCS) — all at once. Three GST flavours, one PAN.
The practical advice: register at the first inter-state supply, pick regular GST, get a basic accounting tool, and stop worrying. The compliance is real but not enormous. Most home bakers spend more time on Instagram captions than on GSTR-3B.
Quick answers
For pure intra-state goods supply below ₹40L — no, registration isn't mandatory. But you can't issue tax invoices, can't claim ITC, and your bigger B2B customers may prefer registered suppliers. Many businesses register voluntarily even below threshold.
Most packaged, branded biscuits / cookies / wafers under HSN 1905 attract 18% GST. Unbranded loose biscuits — 5%. Bread (loaves) — 0%. Pastries / cakes containing cocoa — 18%. Check the official rate notification for your specific product. The CBIC GST rate finder is the canonical reference.
Yes, fully — payment-gateway charges are an input service for your business. If they invoice you with GST and the invoice shows in your GSTR-2B, you claim ITC in your GSTR-3B. Make sure the gateway has your GSTIN on file.
QRMP = Quarterly Return Monthly Payment. Available to businesses with <₹5cr turnover. You file GSTR-1 and 3B quarterly but pay tax monthly via PMT-06 challan. Reduces filing-frequency burden by 75%. Most small businesses opt-in. Full GSTR explainer here.
If you stay below ₹40L total turnover AND all your sales are intra-state — yes, registration would be optional. But your growth ceiling is now hard-capped. Most home brands eventually accept registration as a growth necessity, not a tax annoyance.
When you might want help
Two situations: (1) You're at ₹15-25L turnover and trying to decide whether to register early or wait. (2) You've crossed the threshold, registration is mandatory, and you want clean books from day one — invoice templates, ITC tracking, monthly returns.
Selling online and need GST help?
Registration, monthly GSTR-1 + 3B, ITC reconciliation, e-commerce TCS reconciliation. Fixed monthly fee. Includes a one-time invoice template + accounting setup.
"Neha" and her turnover are composite illustrations. Your specific rate / threshold / classification will depend on your actual product, packaging, and supply pattern.