GST Council will discuss considering food delivery apps as restaurants, will charge 5% tax

The all-powerful GST Council is likely to discuss on Friday a proposal to treat food delivery apps like Zomato and Swiggy as restaurants and levy 5 per cent GST on the supplies made by them, an official said. The proposal to make delivery platforms liable to pay Goods and Services Tax (GST) on restaurant services supplied through them is one of over four dozen proposals taken up by the council in its meeting in Lucknow on September 17. Will go If approved, apps will be given a certain amount of time to make changes to their software so that such tax is charged. Once approved by the GST Council, the food delivery app will have to deposit the GST with the government at the location of the restaurant for the deliveries made by them.

There will be no additional tax burden on the final consumers. According to estimates, the tax loss to the exchequer is Rs 2,000 crore in the last two years due to alleged under-reporting by food delivery aggregators. Under GST, these apps are currently registered as Tax Collectors at Source (TCS). One of the reasons for designing such a proposal was that there was no mandatory registration check by Swiggy/Zomato and unregistered restaurants were supplying through these apps. The amount of tax evasion is also substantial, the official said, adding that even though the tax rate is low, as the quantum of food distribution is high, the official said. Analysis of returns filed by delivery apps and restaurant services for the state of Haryana revealed that for Zomato, the difference in taxable turnover for suppliers where TCS was deducted by Zomato was more than the turnover declared by such suppliers .