The GST department has reportedly issued summons to several restaurants listed on popular food delivery platforms such as Swiggy and Zomato. According to a report, the summons are related to the levy and reporting of GST on packaging charges collected from customers.
GST Authorities Probe Packaging Charge Compliance
The GST officials are investigating whether these restaurants have been properly levying and depositing GST on packaging charges collected since January 2022. As per the report, multiple eateries have been asked to furnish detailed GST records specifically concerning the packaging fees.
This move comes amid speculation about the government's intent to impose an additional 5% GST on food delivery apps. While no official notification has been issued in this regard, the ongoing scrutiny signals the tax department's growing focus on ensuring compliance from all players in the food delivery ecosystem.
Who Pays GST on Packaging Charges?
A key point of contention in this matter is who bears the responsibility for GST on packaging-the restaurants or the food delivery platforms. Tax experts say that since packaging is treated as a distinct supply, restaurants collecting the charge from consumers should ideally be paying GST on it.
However, food delivery apps argue that the onus lies with the restaurants. The GST law generally mandates that the service provider collecting the fee must remit the tax to the government. Hence, if restaurants are recovering packaging charges separately from consumers, they are expected to pay the applicable GST to the state exchequer.
Government Clarifies Position on Additional Tax
In the backdrop of these developments, Pankaj Chaudhary, Minister of State for Finance, recently addressed concerns during the Budget Session of Parliament. He stated that "as of now," there are no plans to impose a 5% GST on food aggregators such as Swiggy and Zomato.
Nevertheless, the current action by GST authorities suggests a tightening of compliance norms and increased scrutiny of indirect tax practices within the booming online food delivery industry.
Final Thoughts
With the food delivery market continuing to expand rapidly, regulatory authorities appear keen to plug revenue leakages and clarify tax responsibilities among stakeholders. Restaurants and food aggregators are advised to review their tax treatment of packaging charges to avoid potential penalties and litigation.
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