Zomato & Swiggy and other Online app-base food delivery platforms will now have to pay 5% Goods and Services Tax (GST). This was decide at the 45th GST Council meeting.
Many users on social media were upset with the decision as they think that they would have to pay more for deliveries under the new GST rule.
But it was soon clarify that the move will have no impact on end consumers as no new tax has been proposed or added.
Addressing a press conference after the meeting Finance Minister Nirmala Sitharaman said e-commerce operators (ECOs) like Zomato and Swiggy will have to collect and deposit the 5% of GST for food deliveries instead of restaurants they pick up orders from.
This is because food delivery apps like Zomato and Swiggy are register as TCS or tax collectors at source.
The council’s decision is to impact the food delivery apps and not customers who were already paying this tax for food delivery to restaurants.
From 1st January 2022 all food delivery apps and cloud kitchens have been ask to collect and deposit the 5% GST.
Reason Behind This Inclusion
Finance Minister Nirmala Sitharaman said the rule has been decide upon to stop revenue leakages that were happening under the current structure as many restaurants were avoiding GST payment on food deliveries.
Sitharaman said the issue was discuss at the meeting and it was decide that the “place of delivery” would be taxed and not the origin point of it.
Finance Minister Nirmala Sitharaman Said :
“The place where the food is delivered will be the point where tax will be collected by services like Swiggy and Zomato,”.
This means consumers who were paying the 5% tax on food delivery to restaurants will now pay it to Zomato and Swiggy.
Revenue Secretary Tarun Bajaj made it clear that the move will not impact end customers and they will not have to pay more.
Tarun Bajaj, Revenue Secretary Said :
“Suppose you order food from the aggregator, now the restaurant is paying taxes. But we found some restaurants were not paying. We are now saying that if you order, the aggregator will collect from the consumer and pay to the authorities instead of the restaurant doing this,”.
“There is no extra tax, there is no new tax. The tax was payable by restaurants, now instead of restaurants, the tax will be payable by aggregators which will also prevent revenue leakage,”.
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