Addressing the media on Friday at the GST council meeting, Finance Minister Nirmala Sitharaman said that food tech giants Swiggy and Zomato will now have to pay GST.
Explaining that there will be no new tax, she said, "The specific issue was discussed and any lack of understanding on things like whether the area where the gig office is located will be taxed or whether the area of service will be taxed were addressed. The substance of what has been agreed is that the place of delivery will be taxed. The place where the food is delivered will be the point where tax will be collected by the services like Swiggy and Zomato."
Basically, earlier the tax was paid by the restaurant owners but now the aggregator will also have to pay the same. Sitharaman further 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."
Since the ministry has already clarified that there will be no new tax for this, therefore, the end-users will not have to pay anything extra. Also, from now on Swiggy and Zomato will be registered as Tax Collectors at Source under GST. As per reports, this tweak in the tax regime was necessary to curb tax evasion.
Currently, restaurants pay 5 per cent GST on food bills while the aggregators like Swiggy and Zomato pay 18 per cent GST on the commission. However, if this new reform is just a mere transfer of collection and payment, then the food prices will not go up, but keep in mind that different foods belong to different tax slabs and that may be a major factor if the price increases in the near future. However, nothing has been said on this front
