Food Delivery Apps May Attract GST Soon

GST Soon

Food delivery apps like Swiggy, Zomato, Food panda may get more expensive very soon. As in next GST Council meet, the proposal to consider online food delivery services as restaurant services will be discussed. The next GST Council meeting is to be held in Lucknow on 17th September, and the said proposal will be subject to approval of the council.

As per the sources in the finance ministry, the fitment committee has proposed that all e-commerce companies who are engaged in food delivery should be treated as restaurant services and taxed accordingly, by bringing them under Section 9 (5) of the CGST Act. Whereas, currently, the GST is paid by the restaurants and not by the delivery apps.

The committee has proposed two options:

The first, is to notify E-Commerce Operators (ECOs) as “deemed suppliers” under two categories:

  • from the restaurant to ECO with a tax rate of 5 per cent without input credit and 18 per cent with input credit
  • from ECO to the customer attracting 5 per cent with limited Input Tax Credit.

While, the second proposal is to notify the ECOs as aggregators and fixing the rate later, where ECOs would have to pay GST for all supplies made for restaurant service.

Since there is a Rs 20 lakh base limit for service providers to get registered, the proposal is to include all restaurant services under the category of ‘Aggregator’ and ECOs as aggregators of delivery services. “The proposal once cleared by the GST Council, the operators may get a three-month window to make all the requisite changes to their software,” sources said.


Knowledge Source:

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