If things go the way it is planned, your food orders placed online through “FoodTech” Apps such as Swiggy and Zomato could get more expensive. The GST council which would be meeting on Friday, 17 Sep. ‘21 for the 45th time since it’s inception, shall discuss levying GST on the delivery of food by the aggregators, also known as “Delivery Partners”. At the moment, the Apps only charge a delivery fee from the Customer who has placed orders through the respective Apps while also charging a commission from the Restaurant partners. The GST Council and other stakeholders within the Ministry seem to believe that the service is a pure-value addition and hence GST must be applicable.
Restaurants already levy GST (and luxury taxes for those within the confines of Star Hotels) which range from 5% for Non A/c Restaurants to 12% for those which operate with A/c. On the other hand, the prices of food and beverage which are offered through the Apps are already inflated, which is mostly at the behest of the Restaurant partner, for want of paying sales commissions in the range of 15-30% to the Delivery Partners. most consumers are unaware of a differential pricing for online orders vs. dine-in and they got attracted with the offers on the app which sometimes range all the way up to 50% or BoGo – Buy One get One, depending on the whims of the App operators.
With an already strained business environment, customers preferring to stay off dine-in opportunities and rather ordering online, the additional GST is expected to wane away the renewed interest which Indians showered on the likes of Swiggy and Zomato (which went public two months ago) all through the lockdown which began since Mar. ‘20. As the online prices are significantly higher than printed Menus at the outlet, and with a steep GST levy, the journey doesn’t seem to be rosy for the already beleaguered F&B Industry. And most importantly, customers, old and young are going to miss their frequent orders, should the GST levy come up anytime soon. We will continue a detailed analysis on this topic regularly.
