BUSINESS
Decision to levy 5% GST was made to prevent 'revenue leakage' by unregistered restaurants. Food apps do not do a mandatory registration check on them.
Despite the fact that from next year five percent Goods and Services Tax (GST) will be levied on supplies made by delivery apps such as Zomato and Swiggy, your food from outside will not cost you dearer.
Finance Minister Nirmala Sitharaman announced on Friday that apps like Swiggy and Zomato will be treated as restaurants and five percent GST will be levied on supplies made by them.
This means that Swiggy and Zomato apps will collect five percent Goods and Services Tax (GST) from consumers instead of the restaurant they pick up orders from, starting January 1, 2022.
However, there would be no extra tax burden on the end consumers taking food delivery from restaurants registered with the GST. This will actually bring unregistered restaurants under the tax slab.
The decision to levy five percent GST was made to prevent 'revenue leakage' by unregistered restaurants. Zomato and Swiggy do not do a mandatory registration check on restaurants from where they collect food.
Finance Minister Nirmala Sitharaman said that the customer would be the point on which tax will be collected. These food apps are registered as Tax Collected at Source in GST records presently.
This means that instead of Goods and Services Tax (GST) being levied on restaurants, who then submit it to the government, the tax would be collected from the consumers and paid to the authorities.
According to estimates, the alleged underreporting by food delivery aggregators has caused the Exchequer a loss of Rs 2,000 crores in the last two years, a media website reported.
Under GST, these food delivery apps are currently registered as Tax Collectors at Source (TCS). Earlier the tax was paid by the restaurant owners but now the aggregator will also have to pay the same.
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