Zomato’s food delivery business saw its growth impacted during the September quarter (Q2FY26) after the company passed on the new 18 percent Goods and Services Tax (GST) on delivery charges to customers, Eternal chief financial officer Akshant Goyal said.
“The other impact was related to GST on the delivery charge that we collect from customers in the food delivery business...This has had a slight negative impact on the growth of the business as we have passed on this tax burden to customers,” Goyal said in a shareholders letter while announcing the company’s Q2FY26 results.
The levy, which came into effect during the quarter, applies to about a quarter of Zomato’s orders—those where delivery is not free. Orders covered under loyalty programmes or promotional offers remain unaffected. Goyal clarified that the new GST applies only to food delivery, not to Blinkit, where delivery fees already include 18 percent GST because of a different engagement model with delivery partners.
Why was GST imposed on delivery charges?
Moneycontrol had reported earlier that the GST Council’s clarification under Section 9(5) of the CGST Act brought food delivery platforms such as Swiggy and Zomato directly under the tax net for delivery services.
The change meant that these platforms would now be responsible for collecting and remitting GST on delivery fees, prompting them to pass on the additional cost to customers.
How did this affect consumer demand?
Goyal said Zomato also witnessed a broader consumption slowdown during the quarter as customers postponed purchases amid GST rate changes across multiple categories, including those where no revisions were announced.
“We saw a negative impact on both growth and margins as customers went into wait-and-watch mode delaying their purchases across categories,” he said.
Will Blinkit benefit from the GST changes?
Blinkit, on the other hand, is expected to benefit from GST rate cuts on everyday essentials and household products.
“The GST rate cuts have brought down the average GST on Blinkit’s typical basket by around three percentage points, which should drive more demand,” Goyal said, adding that the company expects this to reflect in Q3FY26 onwards.
What’s the broader impact on Eternal’s performance?
The combination of transitional consumer caution and the new delivery levy weighed modestly on Eternal’s overall growth during the quarter. While the company has not disclosed the direct financial impact of the GST change, analysts estimate the annual cost burden for large food delivery platforms to be in the range of Rs 180–200 crore.
With food delivery adjusting to a higher tax regime and Blinkit poised to gain from rate cuts, Eternal’s near-term growth trajectory is likely to hinge on how quickly consumer sentiment and order volumes recover in the coming quarters.
How did Zomato perform in Q2FY26?
Eternal Ltd (formerly Zomato), which operates food delivery platform Zomato and quick commerce firm Blinkit, on October 16 reported a 63 percent year-on-year (YoY) decline in quarterly profit after tax (PAT) at Rs 65 crore in the second quarter (Q2) of financial year 2025-26 (FY26), down from Rs 176 crore in the same period a year ago.
The company, which rebranded itself from Zomato to Eternal in March, had reported a net profit of Rs 25 crore in the previous quarter.
The company’s revenue from operations rose 183 percent YoY to Rs 13,590 crore in Q2, up from Rs 4,799 crore a year ago. It had reported revenue of Rs 7,167 crore in the previous quarter.
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