This essentially means, these apps will now have to collect 5 percent GST, or goods and services TaxInstead of restaurants, they take orders from consumers, Finance Minister Nirmala Sitharaman said after the council meeting on Friday evening.
There will be no additional tax burden on the final consumers taking delivery of food from restaurants registered with GST. However, the levy will prevent tax evasion by unregistered restaurants.
The changes will be effective from January 1, 2022 to give time to e-commerce operators to make changes to their software for such taxation.
“E-commerce operators are being made liable to pay tax on the following services provided through them: Transport of passengers, by motor vehicles of any kind through it (with effect from January 1, 2022) handjob restaurant services Provided with certain exceptions (with effect from January 1, 2022), a statement by the Finance Ministry on the decisions of the GST Council said.
“deciding to make food aggregator The tax on supplies made by restaurants with effect from January 1, 2022 appears to have been paid based on empirical data of under-reporting by restaurants, despite collecting tax on supplies of food to customers. The impact on the end consumer is expected to be neutral where the restaurant is registered. Mahesh Jaisingh, partner, Deloitte India, said there could be a further 5 per cent GST for unregistered supplies.
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“A proposal of this nature can generally be implemented in two ways. Option 1, the food aggregator will charge GST and the restaurant will not charge GST. It will be similar to that of cab aggregators and under this option, the restaurant will need to have two Separate invoicing system – one for supplies to restaurants and the other, through aggregators. Option 2, it may be that restaurants continue to charge GST and the food aggregator is treated as a deemed supplier (and buyer). There will be similar effect of tax recovery from the food aggregator like option 1, with a variation that the credit would need to be claimed by the food aggregator,” he said.
According to estimates, the tax loss to the exchequer is Rs 2,000 crore in the last two years due to alleged under-reporting by food delivery aggregators.
Under GST, these apps are currently registered as Tax Collectors at Source (TCS).
One of the reasons for designing such a proposal was that there was no mandatory check of registration by Swiggy/Zomato and unregistered restaurants were supplying through these apps.