The Goods and Services Tax (GST) council on Friday left the tax slab on food delivery apps unchanged but is now asking them to collect the GST from the consumers.
So far, restaurants have been collecting GST from consumers. Finance Minister Nirmala Sitharaman told reporters on Friday that the GST council held a detailed discussion on whether food delivery aggregators like Zomato and Swiggy would be taxed at the point of source or delivery.
“ The sum and substance of what is agreed is that the place where the food is delivered is the point at which the tax will be collected and ... collected by the gig operator,” Sitharaman told reporters today.
The revenue secretary Tarun Bajaj speaking to reporters later clarified that there was no new tax on the delivery apps. The onus of collecting the GST had moved from restaurants to the food aggregators, Bajaj said.
Earlier this week, food delivery apps were fearing an additional tax based on the fitment committee’s recommendations to the Goods and Services Tax (GST).
The fitment committee is understood to have recommended that the GST Council should treat food delivery and cloud kitchen companies as restaurant services and tax them accordingly in a bid to get more tax -- it has estimated potential tax losses of Rs 2000 crore in 2019-20 and 2020-21.
The rate fitment committee, which comprises officers from various states and makes recommendations on tax rate changes, has also suggested that e-commerce operators (ECOs) such as food delivery apps should be classified either as deemed suppliers or aggregators.
If apps like Zomato and Swiggy have to pay GST, consumers too will have to shell out more.
If the GST council categorises ECOs as deemed suppliers, the GST rate will be 5% without input credit and 18% with input credit from the restaurant to the ECOs. On the other hand, if the council classifies ECOs as aggregators, the tax rate will be fixed later.
On Friday, Sitharaman also said that two new Group of Ministers (GoM) had been formed. One group would look at rate rationalisation issues while the second group would look at related issues of e-labels, fast tags, technology, and compliances to ensure there are no loopholes.
Both GoMs will submit their recommendations in two months, she said.