Swiggy, Zomato to charge 5% GST on deliveries

The GST Council has approved the proposal to treat food delivery apps such as Zomato and Swiggy as restaurants and levy 5 per cent GST on supplies made by them. This essentially means, these apps will now be required to collect 5 per cent GST, or Goods and Services Tax, from consumers instead of the restaurant they pick up orders from, Finance Minister Nirmala Sitharaman said on Friday evening after the Council meeting.

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.

"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 (wef 1 January 2022), restaurant services provided through it with some exceptions (wef 1 January 2022)," a Finance Ministry statement on the GST Council's decisions said.

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.

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).