Everything needed to start a food business in India — choosing the right FSSAI category, GST rates on food and restaurant services, labelling rules, labour and premises registrations, and the compliance routine once you are trading.
A food business carries more regulatory surface than most small businesses of the same size — food safety, tax, weights and measures, labour and local premises rules all apply at once. The good news is that the sequence is predictable.
Step One — FSSAI
Every food business operator needs an FSSAI registration or licence before commencing. Which one depends on turnover and on capacity.
| Category | Broadly |
|---|---|
| Basic Registration | Petty operators with turnover up to ₹12 lakh — small retailers, hawkers, itinerant vendors, small home-based units |
| State Licence | Turnover above ₹12 lakh up to ₹20 crore, with capacity limits by activity |
| Central Licence | Turnover above ₹20 crore, importers, exporters, e-commerce food operators, operations in more than one State, and specified categories |
Capacity can force a higher category than turnover suggests. Production quantity, storage capacity, number of vehicles and slaughter capacity each have their own thresholds. A new unit with high installed capacity and low actual turnover may still need a State or Central licence.
Step Two — Business Structure and Registrations
- Structure. Proprietorship is simplest; a private limited company suits anything intended to scale or raise capital; an LLP suits a partnership without external investors.
- PAN and TAN for the entity.
- GST registration, on crossing the threshold or immediately if supplying inter-State or through an e-commerce operator.
- Shops and establishments registration, generally within 30 days of commencing, under the State law.
- Trade licence from the local municipal body, where required.
- Fire safety clearance, for premises above the size or occupancy the local rules specify.
- Weights and measures registration, if you pack goods for sale by weight or volume.
Step Three — Understand the GST Position
- Restaurant services are generally taxed at 5% without input tax credit. That is the trade-off — a low rate, but no credit for rent, equipment or ingredients.
- Restaurants within specified hotel premises, above a room tariff threshold, are taxed at a higher rate with credit.
- Packaged and branded food attracts rates that vary by product, commonly 5%, 12% or 18%.
- Many unbranded staples are exempt or nil-rated; pre-packaged and labelled versions of the same goods may not be.
- Supplies through e-commerce operators have their own mechanism, with the operator liable to pay tax on certain restaurant services.
The 5% restaurant rate without credit is not automatically the cheaper option. A business with heavy rent and large equipment purchases loses substantial input tax credit under it. Model the effective cost both ways before assuming the lower headline rate is better, particularly in the first year when capital spending is highest.
Step Four — Labelling
Every pre-packaged food must carry:
- The name of the food and a description.
- The list of ingredients in descending order of weight.
- Allergen declarations.
- Nutritional information per 100g or 100ml.
- The vegetarian or non-vegetarian mark.
- Net quantity, and retail sale price where required.
- Name and address of the manufacturer, packer or importer.
- The FSSAI licence number.
- Batch or lot number.
- Date of manufacture and the expiry or best-before date.
- Country of origin, for imported food.
- Storage instructions where relevant.
Step Five — Staff and Premises
- Medical fitness certificates for every food handler, renewed annually.
- FOSTAC training for a designated food safety supervisor, where required by size.
- Provident fund at 20 or more employees, state insurance at 10 or more within the wage ceiling.
- Internal complaints committee at 10 or more employees.
- Minimum wages as notified by the State for each category.
- Pest control, waste disposal and cleaning schedules, with records.
Import and Export
- Importing food requires an import export code and a Central Licence, and consignments are cleared through FSSAI's import clearance system with sampling and testing.
- Exporting food requires an import export code, a Central Licence, and generally a registration-cum-membership certificate from the relevant council such as APEDA.
- Destination country requirements — health certificates, phytosanitary certificates, specific labelling — apply on top of Indian rules.
The Ongoing Routine
- File the FSSAI annual return by 31 May, and pay the annual fee with the compliance report on FoSCoS.
- File GST returns monthly or quarterly, and the annual return by 31 December.
- Deposit tax deducted by the 7th and file quarterly statements.
- Maintain hygiene, pest control, temperature and testing records continuously.
- Renew medical certificates annually.
- Review labels whenever a formulation, supplier or pack size changes.
- Apply to modify the FSSAI licence before adding products or changing premises.
Related Guides
- FSSAI Registration & Licence Checklist
- FSSAI Compliance Calendar 2026–27
- Business Compliance Checklist
Key Facts About Starting a Food Business
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
What licence do I need to start a food business in India?
An FSSAI Basic Registration for petty operators up to ₹12 lakh turnover, a State Licence between ₹12 lakh and ₹20 crore, and a Central Licence above ₹20 crore or if you import, export, sell through e-commerce, or operate in more than one State. Capacity thresholds can require a higher category than turnover alone suggests.
What is the GST rate for restaurants?
Restaurant services are generally taxed at 5% without input tax credit. Restaurants in specified hotel premises above a room tariff threshold are taxed at a higher rate with credit available. Because credit is denied at 5%, a business with heavy rent and equipment spending should model both positions.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
Starting a Food Business: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.