GST Officials Review Taxation of Delivery Charges by Swiggy and Zomato

The fitment committee, comprising state and central GST officials, is evaluating whether delivery charges from platforms like Swiggy and Zomato should remain taxed as part of food supplies.

Key Points
Investigation by DGGI

The Directorate General of GST Intelligence (DGGI) has issued GST demand notices for July 2017–March 2023:
–Zomato: ₹400 crore demand
–Swiggy: ₹350 crore demand
The notices claim delivery charges, when bundled with food, attract an 18% GST rate.
Legal Ambiguity

Under Section 7(1)(a) of the CGST Act, 2017, delivery charges may be treated as part of goods and services supply.
Uncertainty persists about whether these charges should follow the same tax classification as food.
Industry Concerns

Platforms argue that treating delivery charges as food supply imposes an unfair tax burden.
This could increase costs and reduce affordability for consumers.
Role of the Fitment Committee

The committee reviews tax policy and addresses ambiguities but cannot overrule DGGI notices.
Recommendations may lead to GST rule clarifications benefiting businesses and consumers.
Upcoming GST Council Meeting

The 55th GST Council meeting is scheduled for December 21, 2024, in Jaisalmer, Rajasthan.
It remains unclear if this issue will be on the agenda.
Implications

A clear decision on taxing delivery charges is critical for:

Ensuring fairness in GST regulations.
Minimizing industry disputes.
Balancing service pricing and consumer affordability.