GST Council will discuss managing food delivery programs such as restaurants, taxing 5%

The powerful GST council is likely to discuss on Friday a proposal to treat food delivery programs like Zomato and Swiggy as restaurants and to charge 5% of GST for their services, the official said.

The proposal to make the delivery platforms obligatory to pay the goods and services (GST) for restaurant services provided by one of the more than 4 proposals to be adopted by Council at its meeting in Lucknow on September 17.

If approved, apps will be given some time to make changes to their software to allow that tax to be levied.

Once approved by the GST Council, food delivery systems will have to compile and submit the GST to the government, instead of restaurants, the delivery made by them. There will be no additional tax burden on end customers.

On average, uncollected tax losses due to alleged under-reporting of food delivery coordinators amounted to Rs 2,000 crore over the past two years.
Under GST, these applications are currently registered as Source Tax Collectors at Source (TCS).

One of the reasons for making such a proposal was that there was no mandatory registration for Swiggy / Zomato and there were no unregistered restaurants that sent through these apps.

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Although tax rates are low, as food delivery rates are high, tax evasion rates are also important, the official said.
Analysis of the reimbursement submitted by delivery services and restaurant services in Haryana province has shown that for Zomato, the pay-per-view service gap for which TCS was deducted by Zomato was greater than the profit announced by those suppliers. Thus, there was a tax evasion.

Similarly, in the case of Swiggy, there was a gap in revenue for suppliers when TCS was deducted by the app was larger than the profit announced by those restaurant suppliers.

Therefore, a proposal for food delivery systems to collect and install GST in government will be presented to the GST Council, the official said.

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