Swiggy and Zomato to charge extra 5% for food delivery from Jan 2022; Know why

Customers ordering food on the food delivery platforms including Zomato and Swiggy will now undergo tax scrutinization as these platforms are all set to charge an additional 5% from the customers under the Goods and Services Tax regime beginning from January 2022. 

This additional charge is likely to affect the coupon discounts provided by Swiggy and Zomato for customers as it is yet to know whether the charge will be added to the base price or the discounted price. However, as officials said, beginning from January 1, 2022, restaurants will be charging an additional 5% on the total cost of food from customers. 

This came under the decision taken by GST Council earlier in September. In its decision, the Council said that food delivery platforms including Zomato and Swiggy will have to collect tax on items from consumers instead of restaurants from where they pick up orders. This will help in easing the tax administration and further GST deposits will have to be made by the customers instead of the restaurants for the deliveries. 

Union Finance Minister who also heads the GST Council after a meeting of Goods and Services Tax Council said that the services by cloud kitchen and food delivery platforms will be charged 5% GST.

No new taxes have been implemented for food delivery platforms: Revenue Secretary

Clarifying the decision taken by the GST Council, Revenue Secretary Tarun Bajaj said that the GST collection centre has been merely transferred and no new taxes have been announced for the consumers. Adding to it, he said that customers ordering food from the aggregator are supposed to pay tax, however, the restaurants are paying those. Finding several instances of restaurants not paying the GST, it has been mandated that the aggregators have to collect the tax from the consumer and further pay it off to the authorities. 

The move has been taken in the backdrop of several cases of tax evasions found exercised by restaurants bringing a gap in tax turnover in food supplies. 

Image: PTI