Online food delivery apps may attract GST soon. Check details

There might be dangerous information for people who regularly order from on-line food delivery platforms like Zomato and Swiggy. Food delivery providers provided by app-based e-commerce operators (ECOs) may quickly attract Goods and Services Tax (GST).

At the upcoming GST Council assembly to be held on September 17, one of many proposals to be mentioned through the assembly is to levy GST on restaurant delivery providers provided by ECOs resembling Swiggy and Zomato.

The suggestion has been made by the Fitment Committee of the GST Council. The committee has proposed that it needs to be clarified by means of a round that serving of food, door delivery and takeaway by cloud kitchens/central kitchens are lined beneath “restaurant service.

Read | GST Council may discuss proposal to include diesel, petrol on Friday

The committee has proposed two options.

The first one involves notifying ECOs as “deemed suppliers” beneath two classes — from the restaurant to ECO with a tax fee of 5 per cent with out enter credit score and 18 per cent with enter credit score — and from ECO to the client attracting 5 per cent with restricted Input Tax Credit.

The second proposal is to inform the ECOs as aggregators and fixing the speed later. With this transfer, ECOs must pay GST for all provides made for restaurant service.

However, to deal with the issue — this may not apply to the eating places in motels with tariffs larger than Rs 7,500 — there’s a proposal for a separate return with GSTIN-based details of tax being collected and paid by ECOs to be declared.

Since there’s a Rs 20 lakh base restrict for service suppliers to get registered, the proposal is to incorporate all restaurant providers beneath the class of ‘Aggregator’ and ECOs as aggregators of delivery providers.

Sources mentioned that when cleared by the GST Council, the operators may get a three-month window to make all of the requisite adjustments to their software program.


Interestingly, the committee noticed that there aren’t any specified authorized standards to determine as to what would qualify as a restaurant or consuming joint.

It states that the phrase “restaurant service is outlined as (vide Notification No.11/2017 — CTR as amended by Notification No. 20/2019-CTR dated 30.09.2019) as provide, by means of or as a part of any service, of products, being food or some other article for human consumption or any drink, offered by a restaurant, consuming joint together with mess, canteen, whether or not for consumption on or away from the premises the place such food or some other article for human consumption or drink is equipped.

As per the definition, the committee mentioned restaurant service, consuming joints together with mess and canteen and repair suppliers are categorised beneath ‘restaurant’ class, whereas Cloud kitchen are usually delivery solely fashions with out consuming joint.

However, some cloud kitchen fashions may present for consuming facility to a buyer.

On the opposite hand, the classification of service states that “restaurant service contains providers offered by eating places, cafés and related consuming services together with takeaway providers, room providers and residential delivery of food.

Before making the suggestions, the committee went by an E-Commerce Sectoral Study of Suppliers dealing in food delivery.

Sources within the authorities mentioned that apps like Zomato are registered as tax collectors at supply (TCS) and they don’t perform obligatory GST registration checks on eating places that aren’t a part of the GST system however are a part of their provide chain.

Food delivery is a now thriving enterprise as per the govt.’s evaluation and the GST Council estimates a income loss within the phase to the tune of Rs 2,000 crore. Tax evaluation groups have been finding out the potential hole between the taxable turnover offered by Swiggy and Zomato in comparison with that offered by the food provider.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.