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

The GST Council is meeting on September 17 and is expected to take up a proposal that could make ordering from food delivery platforms expensive for customers.

September 17, 2021 / 11:01 AM IST
Representative Image

Representative Image

At its upcoming meeting on September 17, 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.

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.

Zomato has recently been in the spotlight for shutting down multiple verticals overnight such as grocery and nutraceutical, soon after going public. It also saw the exit of Gaurav Gupta, one of its co-founders and the face of the company in the run-up to the IPO.

Most recently it also now also put its restaurant loyalty program on hold citing restrictions on dining out due to the pandemic.
Priyanka Sahay
first published: Sep 17, 2021 10:50 am

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