How to start a bakery or cafe in India: registrations and licences

Choosing a structure for a bakery or cafe

A neighbourhood bakery run by a family often starts as a proprietorship or partnership. If you plan to supply retailers, hotels or quick-commerce apps, or to open several cafes, an LLP or private limited company gives limited liability and makes contracts and funding easier.

Bakeries that manufacture at scale for distribution may also benefit from Udyam registration, which gives access to MSME benefits such as protection against delayed payments from buyers.

Licences and registrations checklist

A bakery that only sells over the counter has a simpler list than one that packs goods for other shops. Production units that cross factory thresholds also fall under the labour codes in force since November 2025.

How GST applies to bakery products and cafe service

The distinction is between selling goods and supplying restaurant service. Packaged cakes, pastries and biscuits sold off the shelf are goods, and from 22 September 2025 they attract 5% GST, down from 18%. You can claim input tax credit on ingredients and packaging when you sell goods.

When customers eat in or the cafe serves prepared food and drinks, that is restaurant service, taxed at 5% without credit for standalone outlets. A bakery-cafe doing both should configure its billing to classify each item correctly, and keep separate records so input credit is claimed only for the goods side.

Ongoing compliance

Renew FSSAI and municipal licences on time and keep hygiene, temperature and pest control records. Packed products need FSSAI-compliant labels with ingredients, allergens, net quantity, best-before date and the FSSAI licence number.

File GST returns on time and match purchase invoices with GSTR-2B before claiming credit. If you supply quick-commerce or e-commerce platforms, expect TCS collected by the platform under GST and TDS under income tax, both of which you can claim back.

Income tax and payroll basics for bakeries

A proprietor or partnership with turnover up to ₹2 crore, or ₹3 crore where cash receipts are within 5%, can use presumptive taxation under section 58 of the Income-tax Act 2025, declaring at least 6% of digital receipts and 8% of other receipts as profit. LLPs and companies cannot use this scheme and must keep full books.

Bakeries employ shift workers, so payroll compliance arrives early. ESIC applies once you have 10 or more employees and EPF at 20, and professional tax applies in states that levy it. A production unit that reaches 20 workers with power becomes a factory under the OSH Code.

Pitfalls specific to bakeries

Labelling errors are a frequent reason for food safety notices against small bakeries, so get artwork checked before printing packaging in bulk and keep a file of approved label versions.

• Using an 18% rate on cakes and biscuits after the September 2025 cut, overcharging customers.
• Claiming input credit on cafe service sales, which is not allowed at 5%.
• Selling packed products without Legal Metrology declarations such as MRP and net quantity.
• Storing LPG cylinders beyond permitted limits without fire approvals.

Step by step

1. 1Decide your model

   Over-the-counter bakery, cafe, wholesale supplier or a mix; this drives licences and GST treatment.

2. 2Register the business

   Set up the entity, PAN and bank account.

3. 3Apply for FSSAI

   Choose the right category based on turnover and production capacity.

4. 4Register for GST

   Required above the threshold or before inter-state sales of goods.

5. 5Get municipal approvals

   Trade and health licence, shop and establishment registration and fire NOC where applicable.

6. 6Prepare compliant labels

   Add FSSAI and Legal Metrology declarations and register as a packer if required.

7. 7Set up billing

   Map products to the correct HSN or service code and GST rate.