Ordering food from platforms like Swiggy and Zomato can quickly become costly. These food aggregators have been directed to pay 5% GST on behalf of all restaurants on the cooked food ordered through their platform. This rule will come into effect from the new year i.e. January 1, 2022. Experts believe that this update of the Finance Ministry will have an impact on both consumers and small restaurants. The GST Council in its 45th meeting in September had recommended payment of GST by the restaurants on board for food delivery platforms including Swiggy and Zomato. Earlier this month, the Finance Ministry issued a circular stating that the new rule will come into effect from January 1.
This Update Of under Food aggregators will have to collect and deposit GST from all the restaurants on their platform. This means that food aggregators will have to maintain a separate GST entry for each order they receive from the restaurant. To comply with this arrangement, these platforms will require additional resources, which will increase their cost. It is to be noted that 5% GST will be on top of the existing 18% GST.
Deloitte India partner S. Mani said consumers may see an increase in their e-com food bills from January 1. The compliance load of e-commerce food operators is also expected to increase.
Due to this change, small restaurant owners and food shops will have to pay 5% GST on all orders received from the online platform. This may affect their earnings. Because of this, he can charge more on orders made through Swiggy and Zomato apps. This will have a direct impact on the consumers.
A tax expert told Gadgets 360 that small restaurant owners who come under GST have annual revenue less than Rs 40,00,000. They need not pay GST in normal scenario.
Some stakeholders consider this a positive and see it as a good step for competition. Government officials also claimed that this change will certainly help in curbing tax evasion to some extent.
On this change Sarabjit Singh, owner of Pizza Corner Sizzlin Slices said that it will affect the small players in the market. Their customer base will be impacted. Gautam Kumar, a Delhi-based street sandwich shop owner who started selling through Swiggy in the lockdown, said that we are already facing difficulties. With the relaxation of the rules, people have started turning to big restaurants. Swiggy and Zomato have not commented on this matter.