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Ordering Food Through Zomato, Swiggy To Become Costly Soon As Govt Panel Moots GST On Aggregators

New Delhi: Very soon, ordering food online through Zomato and Swiggy will become expensive as the government panel is proposing to bring app-based food delivery services under the Goods and Services Tax (GST) regime. As per reports, the proposal is likely to come up for discussion at the GST Council meeting to be held on September 17. In the meeting, the GST Council could decide to include apps like Zomato and Swiggy under the ambit of restaurant services, making them liable to pay the tax.Also Read – GST Council Special Session To Be Convened To Discuss Compensation-Related Issues: Sitharaman

It must be noted that the Central GST panel that makes suggestions on tax rate changes has recommended that the e-commerce operators supplying restaurant services on their platforms will be notified as e-commerce aggregators in the same category as restaurant service, making it a supplier that has to pay GST. Also Read – Refusal to Compensate States on GST is Nothing Short of Betrayal by Centre, Says Sonia Gandhi at Chief Ministers’ Meet

The GST panel noted that while online food ordering through food delivery apps had increased during the pandemic, the government was not getting proportional revenue from taxes. The panel also noted that higher volume of food delivery was leading to higher tax evasion, especially in cases were the restaurants are not registered but have higher than the exempted threshold limit of Rs 20 lakh revenue a year. Also Read – 40th GST Council Meeting: Zero Late Fees For Tax Return Filing Between July 2017 & Jan 2020

These food aggregators have come under the tax radar because the Fitment Committee of the GST Council found several restaurants were missing their GST payments. Several food joints/restaurants were found to be not registered under GST.

The panel also estimated GST losses from eating and dining business to the tune of Rs 2,000 crore in the last two financial years (2019 to 21) and suggested that food aggregators be made to pay GST on behalf of restaurants they do business with.

Hence, the panel suggested that door to door delivery of food or takeaway food be put under “restaurant service” category and classified as an e-commerce operator.

If the food aggregators come under GST regime, then the restaurants in hotels with tariffs higher than Rs 7,500 will have to pay return with GSTIN-based details of tax being collected and paid by ECOs.

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