Zomato, Swiggy to approach GST Department to discuss tax payment Zomato and Swiggy are planning to approach the goods and services tax authorities to discuss the recent notices they received regarding the taxation of delivery fees collected from consumers.

The notices, issued by the Directorate General of GST Intelligence, seek a total GST payment of Rs 750 crore, with Rs 400 crore from Zomato and Rs 350 crore from Swiggy, respectively.

These notices are considered pre-demand notices, giving the companies an opportunity to clarify their position to the government before a final demand notice is issued.

According to a senior government official, the delivery of food is a taxable service at a rate of 18 per cent, and since the platforms have been collecting a service fee, they are obligated to pay the appropriate tax.

While the food-delivery platforms have been responsible for collecting and depositing GST on behalf of restaurants since 1 January, 2022, there has been no clear guidance regarding the taxation of the delivery fee component.

Both Zomato and Swiggy argue that they pass on these fees to their delivery partners If the government insists on imposing GST on delivery fees, it could have broader implications for online delivery companies, including quick-commerce platforms and online grocery-delivery firms

To address this issue, earlier this year, the Internet and Mobile Association of India (IAMAI) represented the industry’s concerns to the GST Council, seeking clarity on the matter.

It remains to be seen how Zomato and Swiggy will address the notices and present their cases to the tax authorities. This development has sparked discussions about the potential impact on the online delivery industry as a whole.