Bad news for Indian foodies: Zomato, Swiggy deliveries likely to cost more – Here’s why

The GST Council is set to meet on Friday, September 17, to decide on the issue of putting additional Goods and Services Tax (GST) on app-based online food delivery services.

The news is not a welcome development for thousands of Indians who regularly order in through app-based food delivery services like Zomato and Swiggy. The proposal which could end up in food orders becoming more expensive is on the agenda for the GST Council meeting this week.

The suggestion for additional tax was proposed by the GST Council’s Fitment Committee. As per the committee’s proposal, there needs to be clarity via a circular regarding whether food deliveries to door step or takeaway services by cloud kitchens/ central kitchens come under “restaurant service.”

Two options have been put forward to the GST council.

The Fitment Committee has proposed that e-commerce operators (ECOs) be either notified as deemed suppliers or as aggregators.

If the council goes with the option of “deemed suppliers”, the ECOs will be notified as such under two categories. The proposals here are tax rate of 5 percent without input credit and 18 percent with input credit from the restaurant to the ECO, or 5 percent with limited Input Tax Credit from the ECO to the customer.

In the proposal to notify ECOs as aggregators, the rate will be fixed later.

If the move comes into effect, all supplies made for restaurant service will come under GST to be paid by online food-delivery companies.