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Swiggy, Zomato to collect 5% GST on deliveries from Jan 2022

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Lucknow: Food delivery apps such as Zomato and Swiggy will now be required to collect 5 percent GST on supplies made by them as the GST Council approved a proposal to treat food delivery apps as restaurant

The decision was announced by Finance Minister Nirmala Sitharaman on Friday evening after the Council meeting.

There would be no extra tax burden on the end consumers taking food delivery from restaurants registered with the GST. However, the levy will plug tax evasion being done by unregistered restaurants.

The changes will be effective from January 1, 2022 to allow the e-commerce operators time to make changes in their software for such tax to be charged.

"E-commerce operators are being made liable to pay tax on following services provided through them: transport of passengers, by any type of motor vehicles through it (w.e.f. January 1, 2022), restaurant services provided through it with some exceptions (w.e.f. January 1, 2022)," a Finance Ministry statement on the GST Council's decisions said.

"The decision to make food aggregators pay tax on supplies made by restaurants from January 1, 2022, seems to have been done based on empirical data of underreporting by restaurants, despite having collected tax on supplies of food to customers. The impact on the end consumer is expected to be neutral where the restaurant is a registered one. For those supplies from unregistered, there could be a 5 per cent GST going forward," IANS quoted Deloitte India Partner Mahesh Jaising quoted as saying.

As per estimates, the tax loss to exchequer due to alleged under-reporting by food delivery aggregators is Rs 2,000 crore over the past two years.

Under the GST, these apps are currently registered as Tax Collectors at Source (TCS).

One of the reasons for designing such a proposal was that there was no mandatory registration check by Swiggy/Zomato and there were unregistered restaurants supplying through these apps.

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TAGS:Biz Updates Swiggy GST council 
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