Such meals supply apps will now be required to gather 5 per cent GST, or Goods and Services Tax, from shoppers as a substitute of the restaurant they choose up orders from, Finance Minister Nirmala Sitharaman mentioned on Friday night after the Council assembly.
There could be no further tax burden on the top shoppers taking meals supply from eating places registered with the GST. Nonetheless, the levy will plug tax evasion being completed by unregistered eating places.
The adjustments will probably be efficient from January 1, 2022 to permit the e-commerce operators time to make adjustments of their software program for such tax to be charged.
“E-commerce operators are being made liable to pay tax on following companies supplied by way of them : transport of passengers, by any kind of motor autos by way of it (w.e.f. January 1, 2022), restaurant services supplied by way of it with some exceptions (w.e.f. January 1, 2022),” a Finance Ministry assertion on the GST Council’s selections mentioned.
“The choice to make food aggregators pay tax on provides made by eating places from January 1, 2022 appears to have been completed based mostly on empirical information of underreporting by eating places, regardless of having collected tax on provides of meals to prospects. The impression on the top shopper is anticipated to be impartial the place the restaurant is a registered one. For these provides from unregistered, there may very well be a 5 per cent GST going ahead,” Deloitte India Companion Mahesh Jaising mentioned.
“The proposal might of this nature might usually be applied in two manners. Choice 1, the meals aggregator would cost GST and restaurant wouldn’t cost GST. This might be just like cab aggregators and underneath this selection, the restaurant would wish to have two separate invoicing system – one for provides within the restaurant and the opposite, by way of aggregators. Choice 2, may very well be that the eating places proceed to cost GST and the meals aggregator be handled as a deemed provider (and purchaser). This might have the identical impression of tax restoration from the meals aggregator like in Choice 1, with a variance being that credit score would must be claimed by the meals aggregator,” he added.
As per estimates, the tax loss to exchequer attributable to alleged under-reporting by meals supply aggregators is Rs 2,000 crore over the previous two years.
Underneath the GST, these apps are presently registered as Tax Collectors at Supply (TCS).
One of many causes for designing such a proposal was that there was no necessary registration verify by Swiggy/Zomato and there have been unregistered eating places supplying by way of these apps.