GST Council may deliver blow to Swiggy, Zomato
Food-delivery operators could face restaurants’ GST compliance burden
Online food-delivery operators such as Swiggy and Zomato may have to pay goods and services tax (GST) on restaurant services supplied through them. The GST Council in a meeting on Friday in Lucknow will take this up.
Estimating GST losses of ~2,000 crore in 2019-20 and 202021, the fitment panel has recommended food aggregators be classified as e-commerce operators and pay GST on behalf of the restaurants concerned.
Many restaurants are not depositing GST, while some are not even registered.
The rate fitment panel has suggested the change come into effect on January 1, 2022, to allow food-delivery aggregators to make changes in their software.
However, experts say this may mean that restaurants will have to maintain separate accounts for sales not made through online food aggregators, leading to complexities for small restaurants.
Restaurants providing hotel accommodation and having declared tariffs of ~7,500 and above per room per day may be excluded, the panel has suggested.
GST authorities discovered cases where small eateries had a taxable turnover gap running into several crores. This means that the turnover declared by Swiggy or Zomato in their GSTR 8 returns was higher than the turnover declared by the eatery in its GSTR
3B, the summary return form.
GSTR-8 is a monthly return filed by e-commerce operators.
It contains the details of supplies made to customers through the taxpayer’s e-commerce portal by both registered taxable entities and unregistered ones. “There are no mandatory registration checks by Swiggy or Zomato and there are unregistered restaurants supplying through these fooddelivery portals,” said a government official.
While the rate of tax of 5 per cent is low, the volumes are very high, which means that tax evasion is also high, he said.
“The supply of food through such aggregators has increased multi-fold during the Covid period,” he added.
It was discussed that in most of the cases the tax was collected but not paid to the government.