Ordering food from apps like Swiggy and Zomato may get costlier in India as the year 2022 begins. This, due to the fact that these two companies will be required to pay tax on behalf of all restaurants starting tomorrow, January 1, 2022. The new move comes as a result of the update issued by the finance ministry under which food aggregators are supposed to pay five percent Goods and Services Tax (GST) for ordering food through their platforms.
This comes after the GST Council, in its 45th meeting in September recommended compliance for food delivering platforms like Swiggy and Zomato to pay GST on behalf of restaurants they have on board. Later, the finance ministry earlier this month issued a circular that announced the new rule will come into effect with the new year. ?As ‘restaurant service? has been notified under section 9(5) of the CGST Act, 2017, the e-commerce operator (ECO) shall be liable to pay GST on restaurant services provided, with effect from the 1st January, 2022, through ECO,? the circular said.
According to reports, experts believe that the update will impact both the customers and small restaurants. At the same time, Swiggy and Zomato are also expected to take a certain amount of load due to the change in the tax regime as it will make food aggregators liable for collecting and depositing GST from restaurants on their platforms.
It is important to note here that the five percent GST requirement will be over and above the existing 18 percent GST that platforms need to pay for offering delivery services through their platforms. The tax will essentially be applied to the price of the food items that are listed on these apps.
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