New Delhi: Online food delivery apps like Zomato and Swiggy will now have to pay Goods and Services Tax (GST) to the government for the deliveries made by them. Does this mean additional tax burden on customers? let’s find out.
Addressing a press conference on Friday, Finance Minister Nirmala Sitharaman disclosed the decisions taken in the GST Council’s after-hours meeting held earlier in the day in Lucknow.
Making the announcement, the Finance Minister said that food delivery apps like Zomato and Swiggy will collect five per cent GST from consumers instead of taking orders from consumers.
The GST Council has approved the proposal to treat the food delivery app as a restaurant. Government officials also informed that the changes will be effective from January 1, 2022 to give e-commerce operators time to modify their software for such taxation.
However, customers need not worry as there will be no additional tax burden on the final consumers taking food delivery from restaurants registered with GST.
Currently, bills generated by food aggregators like Zomato and Swiggy already have a tax component, which is paid to restaurant partners, who have to pay this amount to the government.
As of now, restaurant partners pay 5 per cent GST on the food bill, while food delivery aggregators pay 18 per cent GST on the commission that the restaurant charges for providing delivery.
There is no new tax on Swiggy and Zomato, Sitharaman said, adding that the GST collection point was only being shifted.
“Suppose you order food from an aggregator… Now the restaurant is paying tax. But we found that some restaurants were not paying. Now we are saying that if you place the order, the aggregator will charge the consumer and the restaurant Will pay officials instead of it,” clarified Revenue Secretary Tarun Bajaj.
According to estimates, the tax loss to the exchequer is Rs 2,000 crore in the last two years due to alleged under-reporting by food delivery aggregators. Under GST, these apps are currently registered as Tax Collectors at Source (TCS).
Another reason behind implementing the proposal was that there was no mandatory registration check by Swiggy or Zomato and many unauthorized restaurants were operating through such food aggregators.
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