Food delivery apps like Zomato and Swiggy must pay GST, or Goods and Services Tax, instead of the restaurant they pick up orders from, Finance Minister Nirmala Sitharaman said Friday evening after a meeting of the GST Council in Uttar Pradesh’s Lucknow.
At present these apps are registered as TCS, or Tax Collected at Source, in GST records.
Speaking to reporters after the GST meeting, Revenue Secretary Tarun Bajaj clarified that no new taxes were being announced.
“Suppose you order food from the aggregator… now the restaurant is paying taxes. But we found some restaurants were not paying. We are now saying that if you order the aggregator will collect from the consumer and pay to the authorities instead of the restaurant doing this…” he said.
“There is no new tax…” Mr Bajaj added.
He explained that analysis of some returns implied tax evasion on the part of some restaurants.
The analysis – of returns filed by delivery apps and some restaurant services in Haryana – showed that a gap in taxable turnover for suppliers where TCS was deducted by a delivery app was greater than the turnover declared by such suppliers.
The evasion amount is believed to be substantial as food delivery apps have high supply volumes.