GST rise by 5% on food delivery apps; Zomato, Swiggy to get dearer

The government order states, from January 1, 2022, all food delivery apps will be liable to pay a 5 per cent goods and services tax (GST) on their restaurant services. The New Year might create a new hole in your pockets as GST hits high.

The Union finance minister Nirmala Sitharaman, at the 45th meeting of the GST Council, announced the alteration in the tax regime for the hyperlocal food ordering services. She declared platforms such as Swiggy and Zomato should pay GST on behalf of their partner restaurants, including cloud kitchens and central kitchens, whose services are available through their apps. The proposal was accepted, and from 1st January 2022, it would function in the country.

The government aims to curb the tax evasions by restaurants through the tax rise. Restaurants charge their customers with GST on each order through food delivery apps, however, they do not pay taxes to the government. Transferring the onus to food aggregators is aimed at minimizing this practice.

For consumers, while placing, orders should consider the attracted taxes. The government has transferred the responsibility of tax collection from restaurants to food aggregators, and this makes it easier for consumers with no extra charges. However, food ordering services cannot charge you over the proposed GST slab, perhaps, they present extra charges for the extra work they perform on behalf of restaurants.

The 5 per cent GST has been in the order breakup, and it is over, and above the 18 per cent GST that consumers pay to the restaurant, which means no extra charge is given to the government, however, these food aggregators might charge the consumers because of the infrastructure they would need to comply with the new GST regime.

Officially Zomato and Swiggy or other food delivery apps have released any statement yet. The GST applies to only food e-commerce operators, such as Zomato and Swiggy, not for grocery shopping. 

• Food delivery apps
• GST
• Restaurant services
• Swiggy
• Union finance minister Nirmala Sitharaman
• Zomato