Quick Summary
GST on Food Delivery Charges means the tax levied on meals ordered through food delivery platforms like Swiggy, Zomato, etc. The Directorate General of GST Intelligence (DGGI) has issued notices to the major aggregators in the food delivery industry, Zomato and Swiggy seeking GST of Rs. 750
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The Directorate General of GST Intelligence (DGGI) is questioning Swiggy and Zomato over the classification of delivery charges, arguing they should attract an 18% GST rate as part of a 'mixed supply' with food.
The DGGI is seeking Rs 750 crore in GST, with Rs 400 crore from Zomato and Rs 350 crore from Swiggy, for the period between July 2017 and March 2023.
Authorities argue that delivery charges bundled with food supplies should be treated as part of the food supply, which attracts a higher GST rate of 18%, classifying it as a 'mixed supply'.
In 2023, Swiggy and Zomato received GST notices regarding taxability issues on delivery charges, requesting payment of Rs 500 crore each on the total amount collected as delivery charges.
A 'mixed supply' comprises two or more individual supplies made for a single price, where the tax liability is determined by the supply that attracts the highest rate of tax.
Imposing 18% GST on delivery charges could lead to an excessive tax burden on customers and the platforms, and may also impact other delivery services like groceries and medicines.
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