New Delhi: The 45th Goods and Service Tax (GST) Council on Friday, September 17, approved a proposal to direct food delivery platforms such as Zomato and Swiggy to collect and pay 5% GST on food orders directly to the exchequer.
For those uninitiated, the tax department levies a 5% GST on cooked food sold by restaurants. In the case of online food delivery, what used to happen is that aggregating platforms such as Zomato and Swiggy used to collect the GST from customers and gave it on to the restaurants.
After receiving GST from food delivery platforms, restaurants had to pay the tax to the government. However, the tax department noticed that this system in place is confusing and even led to the evasion of taxes by restaurants.
So, to bring clarity in taxation, the GST Council has now decided that food delivery companies will only collect and pay the 5% GST on food orders directly to the government.
“Food delivery apps will now be required to collect 5% GST from consumers instead of the restaurant they pick up orders from,” Finance Minister Nirmala Sitharaman said in a press conference after the Council meeting.
Will the food bill go up?
In short, no. Your online food delivery bill will remain the same, as you were anyways paying the 5% GST on food orders, along with an 18% GST on the food delivery service.
So, in short, the end customers won’t get impacted by the recent change in GST on food orders. On the other hand, food delivery platforms will now have to start collecting and paying 5% GST on food orders starting from January 1, 2022. Also Read: Bengaluru Metro update: BMRCL extends train service timing from today, details here
“E-commerce operators are being made liable to pay tax on following services provided through them: transport of passengers, by any type of motor vehicles through it (w.e.f. January 1, 2022), restaurant services provided through it with some exceptions (w.e.f. January 1, 2022),” a Finance Ministry statement on the GST Council`s decisions said. Also Read: Kya sasta, kya mehnga? Check list of goods and services whose GST rates have been updated