Beginning January 1, 2022, food delivery apps like Swiggy and Zomato will collect 5% GST from consumers instead of the restaurants from whom they pick up orders. Customers, on the other hand, will not have to pay more to have their meal delivered.
The statement was made by Finance Minister Nirmala Sitharaman following the GST Council meeting in Lucknow on Friday, September 17th. The decision was taken to make tax administration easier.
The customer, according to Sitharaman, will be "the point at which tax will be collected by the gig organizations Swiggy and others." These apps are now recognized in GST records as Tax Collected at Source, or TCS.
Tarun Bajaj, the Revenue Secretary, was eager to point out that the move will have no negative impact on customers. He claimed that no additional tax was being imposed, only a change in the GST collecting site.
Instead of levying GST on restaurants, who then submit it to the government, Bajaj stated that the tax will be collected from consumers and sent to the authorities. The move was designed to avoid “revenue leakage” by unregistered restaurants, according to Bajaj. Meal delivery aggregators such as Zomato and Swiggy do not need food delivery providers to register on their apps.
A review of returns submitted by delivery apps and several Haryana restaurant services revealed a discrepancy in taxable revenue for suppliers, suggesting that some restaurants are evading taxes. The study revealed instances when a delivery app's TCS was more than the supplier's stated turnover.
According to estimates, food delivery aggregators' alleged underreporting has cost the government Rs 2,000 crores in the last two years.
Other major pronouncements were also made by the GST Council. Sitharaman was certain that petrol and diesel will not be included in the GST at this time.
Other announcements included the elimination of the GST on the importation of some extremely costly medications for muscular atrophy. The reduced GST rates on medicines used to treat COVID-19 have been extended until December 31.
