Food delivery platforms such as Zomato and Swiggy are set to face fresh challenges after the GST Council announced that local delivery services will attract 18% GST and be brought under the ambit of the CGST Act. The move comes at a time when these companies are already struggling with rising cost pressures.
The GST Council has clarified that local delivery services, currently taxed at 18% with ITC, will continue at the same rate with no change. (Bloomberg/Representational Image)
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The GST Council has also clarified that local delivery services, currently taxed at 18% with ITC, will continue at the same rate with no change.
With the decision to include delivery services in CGST, delivery platforms will not be able to avoid taxes on delivery charges. Until now, platforms have bypassed GST on delivery fees by classifying them as pass-through costs instead of treating them as part of their revenue, Economic Times reported. There were also reports that the GST department is probing restaurants to know if they have escaped taxes on the 'packaging charge.
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The Economic Times, citing Morgan Stanley, reported that the new tax is expected to add approximately ₹2 per order for Zomato’s food delivery business, based on current delivery fees of ₹11–12. For Swiggy, the impact could be higher at around ₹2.6 per order, given its average delivery fee of ₹14.5 per transaction.
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The Economic Times, citing Morgan Stanley, reported that the new tax is expected to add approximately ₹2 per order for Zomato’s food delivery business, based on current delivery fees of ₹11–12. For Swiggy, the impact could be higher at around ₹2.6 per order, given its average delivery fee of ₹14.5 per transaction.
Delivery apps, including Swiggy and Zomato, are still facing cost pressures and recently raised their platform fee to make the most of the festive demand.
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The report also said that GST rate reduction in common food items like oil, milk, and butter could result in countering high delivery fees as it will lower the overall order values, encouraging consumer sentiment.
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Home/India News/Food delivery from Zomato, Swiggy, other platforms to now attract 18% GST
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