Demand to rationalise GST on food delivery biz

The restaurants and food delivery sector has demanded that goods and services tax (GST) on home delivery of food be reduced to five per cent from 18 per cent now to boost the USD 3 billion segment, industry officials said.

Customers taking food delivery at their home or office are paying 13 per cent higher price on the same food and beverages compared to customers who are walking down to restaurants as the dine-in tax rate is 5 per cent, they claimed.

"The online food delivery sector in India has been growing by leaps and bounds. It is currently worth USD 2.94 billion and is growing at a CAGR of 22 per cent. However, the tax complications arising due to the GST is likely to pose a roadblock to this growth," Fooza Foods founder and managing director, Dibyendu Banerjea told PTI.

"The high GST rate of 18 per cent on online food delivery service providers and ineligibility of credit of such GST charged to the restaurants have an adverse impact on the growth of the sector. A reduction in GST rates will keep food costs affordable and create more jobs in the sector while furthering the government's initiatives," he said.

However, restaurateurs said a high commission of 23-24 per cent by food delivery platforms have turned out to be a pain point even for several months of reopening after lockdown.

"With inability to raise prices, our bottomline is hit despite sales reaching closer to pre-covid levels," Platter Hospitality director Shiladitya Chaudhury said.