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Swiggy and Zomato may take a hit if GST council approves proposal to levy tax on deliveries

September 18, 2021 10:40 AM

Swiggy and Zomato may take a hit if GST council approves proposal to levy tax on deliveries
 The GST Council is expected to discuss a proposal to treat online food delivery platforms such as Swiggy and Zomato as aggregators and levy a tax of 5 percent.

Swiggy, Zomato may take a hit if GST council approves proposal to levy tax on deliveries

the GST Council is expected to discuss a proposal to treat online food delivery platforms such as Swiggy and Zomato as aggregators and levy a tax of 5 percent.

If the proposal is approved, food ordering could become expensive for the end consumer as the companies may pass on the additional charge to them.

Also Read : Zomato Ltd to raise $1.26 bn through IPO by pricing shares at Rs 76 each

Currently, online bills generated by food aggregators already have a tax component in it. However, according to people privy to the practices of these firms, this taxed amount is paid back to the restaurant partners who are then expected to pay this amount to the government.

This new amendment will ensure that the companies do not pay this to the restaurants but directly to the government.

The catch is that different food items invite different slabs of tax rate. It will be interesting to see if the government washes all of that away to make room for a uniform 5% tax charged on the delivery of food by these agregators.

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