Swiggy, Zomato to collect GST for food deliveries:
Finance minister Nirmala Sitharaman on Sep 17th Friday said that Food delivery apps like Zomato and Swiggy will collect five percent GST, Goods and Service Tax (GST) Council has been discussing. The proposal of bringing e-commerce operators under the GST ambit for providing certain services. The all-powerful GST Council today decided to charge online food-delivery operators such as Zomato and Swiggy a tax even as it extended concessional tax rates on certain coronavirus drugs by three months till 31 December.
The e-commerce operators will be liable to pay tax for providing the following services —
a) Transport of passengers, by any type of motor vehicles through it,
b) Restaurant services provided through it with some exceptions. Food delivery aggregators such as Zomato and Swiggy will have to pay GST for supplies made by them. From January 1, food delivery apps will have to collect and deposit the GST with the government, in place of restaurants, for deliveries made by them.
At present these apps registered as TCS, or Tax Collected at Source, in GST records.
The food delivery apps will have to collect and deposit GST with the government, for deliveries made by them. Currently, online bills generated by food aggregators already have a tax component in them. However, this taxed amount is paid back to the restaurant partners. Who are then expected to pay this amount to the government? The restaurant listed on food delivery applications pays 5 percent GST on food bills. The food delivery aggregators pay 18 percent GST on the commission. It charges the restaurants for providing delivery and marketing services.
‘No new taxes announced’
Speaking to reporters after the GST meeting, Revenue Secretary Tarun Bajaj clarified. That no new taxes being announced and that the GST collection point simply being transferred.
“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…” Revenue Secretary Tarun Bajaj said.
On how the GST will implemented on food aggregators, Mahesh Jaising explained. “The proposal could of this nature typically implemented in two manners. The food aggregator would charge GST and the restaurant would not charge GST. This would be similar to cab aggregators and under this option. The restaurant would need to have two separate invoicing systems – one for supplies in the restaurant and the other, through aggregators.”
“The other option could be that the restaurants continue to charge GST and the food aggregator treated as a deemed supplier (and buyer). This would have the same impact of tax recovery from the food aggregator,” he further mentioned.
“There is no new tax…” Mr. Bajaj added. He explained that analysis of some returns implied tax evasion on the part of some restaurants.
“ONE CANNOT THINK WELL, LOVE WELL, SLEEP WELL, IF ONE HAS NOT DINED WELL.”
Ms. Sitharaman said the Council had discussed this in the light of a recent Kerala High Court order and concluded. “It was not the right time to bring petroleum products under the GST”.
GST on drugs used for cancer treatment also reduced – Keytruda (the brand name for Pembrolizumab), for example, will now invite-only five percent GST compared to 12 earlier.