As per a recent report, online food delivery platforms Zomato and Swiggy have received goods and services tax (GST) notices worth Rs 500 crore each.
I-T Department Released Tax Notice For Zomato and Swiggy
The notice seems to be related to the ‘delivery charge’ that both of these online food delivery platforms have been charging from its customers.
In their defense, the companies said that the ‘delivery charge’ is the cost borne by the riders who bring food to customers and they collect that cost from customers and pass it to riders.
But it appears that the tax authorities aren’t convinced, as per the media report.
The tax authorities believe that Swiggy and Zomato collect this delivery charge which gets added into their revenue.
So, the food aggregators must pay tax for that.
Although a senior executive said that the delivery charge goes directly to the rider in the report.
Further adding, “Ours is a platform that brings the rider and the customer close to each other. The delivery fee is not our revenue, instead, it goes directly to the rider. This is an interpretation of guidelines, and we have a clear go-ahead from the tax consultants.”
While requesting anonymity, the senior executive said, “We continue to stress upon the fact that riders are not our employees but contractors. However, in this case, the government is trying to say that the money the riders are collecting is being done on our behalf; therefore, this constitutes our revenue.”
Increase In Fees By Online Delivery Platforms
In the meantime, Swiggy had increased the platform fee from Rs 2, introduced in April, to Rs 3 for food orders from last month.
Following the footprint, Zomato is also increasing its platform fee to Rs 3 per order from an initial Rs 2.
Besides this, Zomato has also started to charge platform fees from Zomato Gold users, who were previously exempted.
Talking about the same, a Swiggy spokesperson said that “there has been no significant change on platform fee, which is applied by most service players and is a common practice across industries”.
