GST Liability on Swiggy, Zomato to Ease Restaurants’ Compliance Burden: Officials

Food delivery services, restaurants and could Kitchens attracts a Goods and Services Tax of 5% Since November, 2017 and only the liability to pay tax has been shifted to electronic commerce operators (ECO) such as Swiggy and Zomato to reduce their compliance burden and for ease of doing business, government officials said.

The ECOs were collecting GST of 5% on these services prior to January 1, 2022 also. Now they will not only collect but will also pay the GST collected by them from the consumers directly to the government, one of the officials said.

“This change has, in fact, freed restaurants and cloud Kitchens from the requirement of paying taxes and filing returns etc. and will thus reduce their costs,” the official said, adding that this is a trade facilitation measure which will make it easier for the restaurants and cloud Kitchens in the MSME sector to do business.

The GST Council had approved the shift at its September meeting. The liability to pay GST on services supplied through ECOs, was on the restaurants and cloud Kitchens earlier.

Another official said a similar shift in the case of taxi or auto rickshaws would also not increase the levy payable by consumers. From January 1, 2022 GST of 5% is being levied on auto rickshaws booked through ECOs such as Ola and Uber.

Radio taxi and motor cabs booked through ECOs attract ted a GST of 5% prior to January 1, 2022 also, the official added.

“This will not put any GST compliance burden on the individual auto rickshaws operating through the ECOs. ECOs are organized players with sufficient IT and other infrastructure to meet the requirements associated with payment of GST,” the official said, adding auto Rickshaws hired offline continue to be exempt from GST.

The official said the move may actually help the individual offline auto rickshaws drivers in competing with organized players like Ola and Uber better.

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