Introduction
The food delivery industry in India has witnessed a massive boom over the last few years, fueled by digital transformation, busy lifestyles, and changing consumer preferences. Platforms like Zomato, Swiggy, and Uber Eats (now merged with Zomato) have become household names. With this rapid growth, the Goods and Services Tax (GST) regime has also evolved to bring clarity and compliance among stakeholders. This article explains the applicability of GST and the tax rates on food delivery services in India.
1. Understanding the Role of Food Delivery Platforms
Food delivery platforms act as intermediaries between restaurants and consumers. Earlier, restaurants were responsible for collecting and remitting GST on food sold through these platforms. However, from January 1, 2022, the GST Council made a key change to simplify and improve tax collection.
2. GST Council’s Key Decision (Effective from January 1, 2022)
As per the 45th GST Council meeting held in September 2021, it was decided that:
E-commerce operators (ECOs) like Zomato and Swiggy would be liable to collect and pay GST on behalf of restaurants for orders placed through their platforms.
This change came into effect on January 1, 2022.
This move was made to plug revenue leakage and improve compliance, as many small restaurants were not properly reporting their online sales.
3. GST Rate on Food Delivery
The applicable GST rate for food delivery services is:
5% GST on food supplied through restaurants, whether dine-in or delivery, without input tax credit (ITC).
If the restaurant is located within a hotel charging room tariffs of Rs. 7500 or more, the GST rate is 18% with ITC.
For most regular food deliveries through apps like Swiggy or Zomato, the effective GST rate is:
5% GST, which is charged to the customer and collected by the food delivery platform.
4. Impact on Consumers and Restaurants
Consumers: There is no increase in the GST rate for the end consumer. The 5% GST they were paying earlier still applies but is now collected by the delivery platform.
Restaurants (Excluding Cloud Kitchens): Those supplying food through their premises are no longer required to remit GST on such orders separately; the platform does it for them.
Cloud Kitchens and Central Kitchens: These are treated as restaurants for GST purposes and attract 5% GST (without ITC) or 18% (with ITC), depending on their category.
5. Registration Requirements for Restaurants
Restaurants not previously registered under GST (e.g., those below the threshold turnover of Rs. 20 lakhs) are not required to register even after this change, provided they supply food only through ECOs.
However, ECOs must obtain GST registration in every state where they operate to comply with tax collection at source (TCS) and return filing requirements.
6. Tax Collected at Source (TCS)
Apart from collecting GST, food delivery platforms must also deduct TCS at 1% on the net value of taxable supplies made through them and report the same in GSTR-8.
7. Invoice Issuance
Under the revised GST framework:
The ECO (like Zomato or Swiggy) issues the tax invoice to the customer.
The restaurant issues a bill of supply to the ECO.
This structure ensures clear reporting and tax trail for compliance.
8. Compliance and Return Filing
E-commerce operators are responsible for:
Collecting GST from customers.
Depositing GST with the government.
Filing monthly returns (GSTR-1, GSTR-3B) and GSTR-8 for TCS.
Restaurants must still file regular GST returns for their dine-in or offline sales
Conclusion
The GST regime on food delivery services has been structured to ensure transparency and boost compliance. With e-commerce operators now responsible for tax collection on restaurant orders placed through their platforms, the process is more streamlined. It also reduces the burden of tax compliance for smaller restaurants and ensures better tax administration for the government. Stakeholders in the food delivery ecosystem must remain updated with the latest GST regulations to ensure smooth operations and compliance.