Zomato, Swiggy want to clarify stance to DGGI on tax notice

economictimes.indiatimes.com:

Zomato and Swiggy are planning to approach goods and services tax authorities to explain their position, after they received notices seeking tax on delivery fees collected from consumers.

The issue could have wider implications, as a senior government official said other companies collecting such fees from users could also be asked to pay tax on the amount, which the platforms claim that they pass on to their delivery partners.

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The Directorate General of GST Intelligence issued notices to the two food-delivery companies, seeking GST of Rs 750 crore. It has sought Rs 400 crore from Zomato and Rs 350 crore from Swiggy, people in the know said.

These are pre-demand notices, which give the companies a chance to explain their position to the government before a final demand notice is issued, the people said.

“Companies are engaging with lawyers and tax consultants to provide clarity to the authorities that the delivery fees are not accounted for as revenue but passed on to delivery workers,” a person briefed on the matter said.

The government official cited earlier, however, said delivery of food is a service liable to be taxed at 18% and since the platforms have been collecting a service fee, they must pay the tax.

«They have not paid GST on delivery fee charged from the consumers for the period between July 2017 and March 2023,” the official told ET. GST was introduced in July 2017.

Swiggy did not respond to queries sent by email, while Zomato refused to comment.

The issue at