Zomato

Zomato and Swiggy fool delivery will become expensive from January 1

Business Finance Startup Technology

If ordering meals from Zomato and Swiggy is a hobby or habit for you, it might quickly become pricey. According to government guidelines, starting in January, all meal delivery apps will be required to pay a 5% Goods and Services Tax (GST) on their restaurant services. This additional fee might be passed on to users of food delivery apps.

At the 45th meeting of the GST Council in September, Finance Minister Nirmala Sitharaman announced modifications to the tax structure for hyperlocal food ordering services. It was recommended that applications like Swiggy and Zomato pay GST on their partner restaurants, such as Cloud Kitchen and Central Kitchen. Their services are available through their apps. This proposal was adopted and will now take effect on January 1, 2022, the first day of the year.

Before the new GST laws take effect, the government hopes that this measure would stop tax cheating by eateries, who are responsible for collecting and depositing GST. Restaurants charge GST on every order placed through a meal delivery app but fail to pay the tax to the government. It is hoped that delegating responsibilities to food aggregators will prevent tax avoidance. Overall, meal delivery services might charge you more to cover their costs.

The 5 percent GST on your order breakdown is in addition to the 18 percent GST you pay to the restaurant. So, while you are technically not paying any more taxes to the government, these food aggregators may charge you a fee since they would be required to follow the new GST system owing to the fundamental structure.