Understanding the 18% GST on Zomato and Swiggy: What It Means for Consumers and the Food Delivery Industry
Online food delivery apps like Zomato and Swiggy have become very popular in India. They let people order food quickly, choose from many restaurants, and track their orders in real time. But many people are confused about the 18% GST (Goods and Services Tax) that appears on their bills. Let’s break it down in simple words.
What is GST?
GST (Goods and Services Tax) is a single tax that replaced old taxes like VAT and service tax from July 2017. It is charged when goods or services are sold or used.
There are different rates of GST – 5%, 12%, 18%, and 28% – depending on the item or service. For food, the most common GST rate is 5%.
How Food Delivery GST Works
Before 2022, restaurants were the ones who collected GST on food orders. Apps like Zomato and Swiggy only passed on the order but didn’t collect the tax.
Since January 1, 2022, the government made a change. Now:
Apps like Zomato and Swiggy have to collect 5% GST on food directly and pay it to the government.
But there is another tax — 18% GST is applied on delivery charges and platform fees, not on the food itself.
This is why customers see 18% GST on their bills.
Where the 18% GST Comes From
The confusion happens because there are two taxes:
GST on Food (5%)
Charged on the food price only.
Zomato/Swiggy collect and send it to the government.
GST on Platform Services (18%)
Charged on delivery fees and any “platform” or “convenience” fees.
These are services provided by the app. Extra services are taxed at the higher rate of 18%.
Example of a Zomato/Swiggy Bill
Suppose you order food worth ₹300.
Delivery fee: ₹40
Platform fee: ₹10
Now the taxes:
5% GST on food (₹300) = ₹15
18% GST on fees (₹40 + ₹10 = ₹50) = ₹9
Final bill: ₹300 + ₹40 + ₹10 + ₹15 + ₹9 = ₹374
So, the food is taxed at 5%, but the services are taxed at 18%.
Why the Government Changed the Rules
The change was made because:
Many small restaurants were not paying GST properly.
Having big platforms like Zomato and Swiggy collect tax ensures better tracking.
It makes taxes on dine-in and delivery more uniform.
Impact on Restaurants
Positive: Small restaurants don’t have to keep too many tax records for online orders.
Negative: Restaurants feel they lost control over how taxes are shown, and food looks more expensive to customers due to extra fees plus GST.
Impact on Consumers
People often feel bills are higher than expected.
Many don’t understand the two different GST rates on the same order.
Some customers avoid high app charges by ordering directly from restaurants.
Arguments and Criticism
Some say charging 18% GST on delivery is unfair because food delivery feels like an essential service.
Consumer groups complain that apps make the bill confusing, mixing platform charges with taxes.
Others believe lowering GST on delivery could help since home delivery grew a lot after COVID.
What Could Happen in the Future
The government may reconsider GST rates for digital services.
Apps may show bills in a clearer way.
Platforms could even bear part of the cost to attract more users.
Conclusion
When you see 18% GST on Zomato or Swiggy, it’s not on the food itself. It’s on delivery and platform charges. The food still has only 5% GST.
The extra 18% on services is what increases the final bill and causes confusion. Knowing this breakdown helps customers understand their bills better.
Comments
Post a Comment