Online ordering to get costlier as 5% GST now applicable on Swiggy, Zomato

Beginning this New year, food delivery has now become costlier not just for customers but also for small restaurants who were not paying GST till now.

Starting Jan 1, food aggregators like Swiggy and Zomato will have to collect and deposit tax at 5 per cent rate.

These changes are based on the decision taken at the 45th GST council meeting on September 17, 2021, to crack down on restaurants that don't pay taxes.

As per the new rule, the services offered by online food delivery platforms and cloud kitchens and central kitchens were covered under ‘restaurant service’ and would attract 5% GST without any input tax credit (ITC), shared the Union Finance Minister post meeting.

Currently, restaurants registered under GST are collecting and depositing the tax.

As per the Govt, many small restaurants who are delivering through these platforms were evading taxes, even though they were being collected from the customers.

Also to tackle evasion, the GST law has been amended to state that the input tax credit will now be available only once the credit is appearing in GSTR 2B (purchase return) of the tax payer. Five per cent provisional credit, earlier allowed in GST rules, will not be permitted post January 1, 2022.