Food delivery apps like Zomato and Swiggy will collect five per cent GST, or Goods and Services Tax, from consumers rather than the restaurant they obtain orders from, government minister Nirmala Sitharaman said Friday evening after a gathering of the GST Council in 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, which the GST collection point was simply being transferred.
“Suppose you order food from the aggregator… now the restaurant is paying taxes. But we found some restaurants weren’t paying. We are now saying that if you order the aggregator will collect from the buyer and pay to the authorities rather than the restaurant doing this…” he said.
“There isn’t any new tax…” Mr Bajaj added.
He explained that analysis of some returns implied nonpayment on the a part of some restaurants.
Analysis – of returns filed by delivery apps and a few Haryana restaurant services – showed the gap in taxable turnover for suppliers where TCS was deducted by a delivery app was greater than turnover declared by such suppliers.
The evasion amount is believed to be substantial as food delivery apps have high supply volumes.
Among other major decisions announced by the powerful GST Council tonight was that petrol and diesel wouldn’t, at now, be brought under the GST regime.
Ms Sitharaman said the Council had discussed this within the light of a recent Kerala state supreme court order and concluded “it wasn’t the correct time to bring petroleum products under the GST”.
The minister also said that GST on bio-diesel – which oil marketing companies use to blend with diesel – had been reduced from 12 to 5 per cent.
The Council also extended concessional GST rates on drugs utilized in COVID-19 treatment till day, and exempted certain other medicines, including those employed in the treatment of muscular atrophy (and single doses of which cost crores of rupees).
GST on drugs used for cancer treatment were also reduced – Keytruda (the name for Pembrolizumab), for instance, will now invite only five per cent GST compared to 12 earlier.
