Food Delivery May Get Costlier as GST 2.0 Brings Delivery Fees Under 18% Tax

The Goods and Services Tax (GST) Council's landmark reform, approved at its 56th meeting on September 3, has reduced India's complex four-slab structure into a simpler two-tier system, with essentials taxed at 5% and other goods and services at 18%. A special 40% rate will continue to apply to luxury and sin goods. The revised structure will come into effect on September 22, 2025.

The overhaul, spearheaded by Union Finance Minister Nirmala Sitharaman and representatives of all states, is designed to simplify compliance, improve transparency, boost disposable incomes and stimulate consumption. Experts say the reform signals a clear shift towards demand-led growth in India's economy.

Impact on Online Food Delivery

While most consumers will benefit from lower taxes on essentials, foodies may feel a pinch. Global brokerage Morgan Stanley has said that local e-commerce delivery services, including platforms like Zomato, Swiggy and Instamart, will now attract 18% GST under Section 9(5) of the CGST Act.

This move is expected to slightly increase food delivery charges:

• Zomato: Delivery fee may rise from ₹11-12 to around ₹14.5 per order, an impact of nearly ₹2.
• Swiggy: Delivery fees are estimated at ₹14.5 per order, implying an impact of about ₹2.6 per order.
• Swiggy Instamart: Average delivery fee expected to be ₹4 per order.
• Blinkit: Delivery fees were already under GST, so no major changes are expected.

According to Morgan Stanley, "The potential impact will be around ₹2-2.6 per order depending on the platform, which could reflect in higher consumer charges."

Reform Aimed at Boosting Demand

Despite these incremental increases in service charges, economists believe the overall tax rationalisation will expand demand. By cutting down anomalies and reducing rates on several daily-use goods, GST 2.0 is expected to leave more money in consumers' hands, thereby boosting spending.

Industry watchers also note that the clarity on tax rates will reduce litigation and disputes, creating a friendlier compliance environment for businesses.

With the new regime set to roll out on September 22, all eyes will be on how the balance between affordability, revenue mobilisation, and consumption growth plays out in the coming months.