Understanding GST Charges on Food Delivery: Swiggy, Zomato, and the 18% GST Dilemma

When making food purchases, one often deals with different tax structures such as Goods and Services Tax (GST). Absorbing these taxes becomes more intriguing when it comes to food delivery platforms like Swiggy and Zomato. Why do these companies charge 18% GST on transactions, even if the restaurants they service fall under the 5% GST slab? This article seeks to clarify this confusion and provide a detailed explanation.

The Role of GST on Restaurant Orders

When you order food from a restaurant, the tax charged is typically 5%, reflecting the restaurant's category and the goods being sold. This tax is levied directly on the food and perishable items. However, when you use a food delivery app like Swiggy or Zomato, the transaction involves additional services that go beyond just the food order.

Courier Services and GST

Swiggy and Zomato are categorized as third-party delivery services, akin to courier companies. They play a crucial role in facilitating the delivery of food from restaurants to customers. In such a scenario, the GST applicable is 18%, as it pertains to the service of delivery rather than the food item itself. This 18% GST covers various aspects such as the cost of packaging, delivery logistics, and any other services related to the order process.

When GST Charges Differ for Restaurants

It's important to note that the 5% and 18% GST figures apply to different categories of restaurants. While most restaurants are categorized under the 5% GST slab, certain high-end establishments, including luxury bakeries and specialty restaurants, fall under the 18% GST category. This classification is based on the types of services and goods they offer.

Why Swiggy and Zomato Charge 18% GST Even for Restaurants Under the 5% Slab?

When restaurants fall under the 5% GST slab, it is primarily due to the goods they sell, which include predominantly food and beverages. However, when these same restaurants deal with the services provided by Swiggy or Zomato, they are considered service providers. Hence, these services fall under the 18% GST slab, as mandated by the GST Council.

A perfect example is an ice cream bakery. The bakery itself might be in the 5% GST slab due to its food items. But when it partners with delivery platforms like Swiggy or Zomato, the service of delivery is taxed at 18%, even if the bakery is a high-end establishment with ice cream and pastries.

Examples and Conclusion

For instance, if a customer orders a meal from a high-end restaurant, the 18% GST will apply to the delivery service provided by Swiggy or Zomato. The overall cost of the meal remains as per the restaurant's price list, but the GST charged on the delivery service is 18%.

Therefore, when you see a 18% GST charge on your Swiggy or Zomato order, it reflects the service provided by the delivery platform rather than the goods ordered from the restaurant. This helps in clarifying the tax breaks and ensuring transparency in the transaction process.

Happy Eating

Next time you order food from a restaurant via a food delivery app, remember that the GST charges reflect the services involved in delivering your meal, rather than the restaurant's categorization.

Conclusion
Understanding the GST charges on food delivery services can be confusing. However, by recognizing the differences in the categories between the restaurant and the delivery service, you can easily understand why Swiggy and Zomato charge 18% GST, even when the restaurant falls under the 5% GST slab. This knowledge helps in transparency and makes the overall shopping experience smoother.

Keywords: GST charges, Swiggy, Zomato, food delivery, restaurant