GST Council to Discuss Treating Food Delivery Apps as Restaurants, Levying 5 Per Cent Tax

The omnipotent GST Council is probably going to focus on on Friday a proposal to deal with meals supply apps such as Zomato and Swiggy as eating places and levy 5 per cent GST on provides made by them, an official stated. A proposal to make the supply platforms liable to pay the Goods and Services Tax (GST) on restaurant companies provided by way of them is one in every of over four-dozen proposals that shall be taken up by the Council at its assembly in Lucknow on September 17. If accepted, the apps could be given sure time to make modifications of their software program to enable for such tax to be charged. Once accepted by the GST Council, meals supply apps could have to accumulate and deposit GST with the federal government, rather than eating places, for deliveries made by them.

There could be no additional tax burden on the top shoppers. As per estimates, tax loss to exchequer due to alleged under-reporting by meals supply aggregators is Rs 2,000 crore over the previous two years. Under GST, these apps are at present registered as Tax Collectors at Source (TCS). One of the explanations for designing such a proposal was that there was no obligatory registration verify by Swiggy / Zomato and there have been unregistered eating places supplying by way of these apps. Even although the speed of tax is low, since meals supply volumes are excessive, the tax evasion quantity can be substantial, the official stated. Analysis of returns filed by supply apps and the restaurant companies for the state of Haryana confirmed that for Zomato, the hole in taxable turnover for suppliers the place TCS was deducted by Zomato was better than the turnover declared by such suppliers.