In a big development, Govt of India has now ordered food delivery platforms such as Swiggy and Zomato to pay 5% GST on all the deliveries.
What does this mean? Will the consumers end up paying more tax?
We will decode this new tax rule right here.. And reveal the truth!
5% GST For Swiggy, Zomato Deliveries
During the recent GST Council meeting, Union Finance Minister Nirmala Nirmala announced that from now on, food delivery aggregators and platforms such as Zomato and Swiggy will need to pay 5% GST for all deliveries.
Clarifying this new tax rule, the Minister said that from henceforth, GST will be levied at the point of delivery, and not the restaurant.
Does this mean that the customers who are ordering food need to pay extra tax?
No!
Customers Won’t Be Paying Extra
First and foremost, let’s be clear that the customers who use these food delivery apps, won’t be paying any extra GST.
Earlier, restaurants and hotels were supposed to add the GST cost to the total invoice, and then charge the same from the customers.
But with the new rules, the food delivery apps will pay this same GST, after charging from the customers.
Hence, for the customers, instead of paying GST to the restaurants, they will be paying the same GST to food delivery apps like Zomato and Swiggy.
This has been done because the Govt and tax authorities found out that some restaurants are not paying GST for the food orders.
Explaining this, Revenue Secretary Tarun Bajaj said, “Suppose you order food from the aggregator… now the restaurant is paying taxes. But we found some restaurants were not paying. We are now saying that if you order the aggregator will collect from the consumer and pay to the authorities instead of the restaurant doing this…”
He added, that no new tax has been imposed.
Hence, for the customers, a very important piece of information: You are not paying any extra GST or tax for the food orders. Just that you tax payment source has been changed from the restaurants to the food delivery platforms.
We will keep you updated, as more details come in.
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