Food Aggregators To Bear GST Tax Slap From January 2022: GST Council

New Delhi – According to confirmed reports, the GST Council has directed food aggregators that they will now have to deposit GST to the government without slapping the cost to the end customer. The decision was taken at the 45^th GST Council meeting held recently.

This gives more teeth to the GST Department and certain accountability to service providers like Zomato and Swiggy, which do take a 30 percent cut from every outlet they have on board, apart from charging an extra 20 percent from the customer too.

According to a formal statement made by Finance Minister Nirmala Sitharaman, this move has been made to curb a leakage that was consistently happening due to outlets avoiding paying GST on food deliveries. The undue panic amongst end-users has also been put to rest, as it has been made clear that the cost will not be passed on to them.

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The new ruling merely means that “The place where the food is delivered will be the point where tax will be collected by services like Swiggy and Zomato,” FM said. Technically, this means consumers who were paying the 5 percent tax on food delivery to restaurants will now pay it to Zomato and Swiggy.

Adding on Revenue Secretary Tarun Bajaj said, “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.” The decision will affect the aggregators who have been asked to from January 1, to collect and deposit the 5 percent levy. This is because food delivery apps like Zomato and Swiggy are registered as TCS or tax collectors at the source.