Under the new GST rates which came into effect from 22 September, the delivery service received through e-commerce operators (such as Zomato, Swigi) will be charged 18% GST, along with 5% GST already taken on restaurant services. That is, total tax will have to be paid more.
At the same time, big chains like dominos, which have their own delivery network, have to pay only 5% GST (for restaurant service) and packaging charge. Because of this, if a customer orders directly from domino on the app or phone, he will not have to pay an additional 18% tax.
Customers can also order directly from their nearest restaurant, where only 5% GST will be charged. Conversely, companies like Zomato and Swigi can now put 18% tax burden on customers, which can increase both delivery charge and food price.
Food delivery companies estimate that this new tax may lose more than Rs 200 crore in their annual earnings. In such a situation, the delivery charge will increase, or the delivery partners’ earnings will decrease.
Many restaurants have earlier appealed to customers to order directly through the #logout campaign. The new GST rule can make this trend strong again, as now customers would like to order directly from restaurants to save additional tax.
Order directly from restaurant = only 5% GST
Order from Zomato/Swigy = 5% + 18% GST (on delivery service)
Customers will now get direct benefit from joining the restaurant.
