The Income Tax Department is going to increase its scrutiny of the discounts offered by delivery platforms like Zomato and Swiggy, as the new GST regime kicks in for them, as per a report in The Economic Times. Under the new rules, food aggregators like Swiggy and Zomato are mandated to collect and deposit GST with the government on restaurant services supplied through them.

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According to the GST Council, the food delivery apps will be made liable to pay 5 percent tax on restaurant services provided by them with effect from January 1, 2022. Services provided by cloud kitchens or central kitchens will also come under the ambit of restaurant service and attract 5 percent GST.

Also read: Host of changes in GST law to come into effect from January 1

But unlike restaurants, e-commerce operators (ECOs) often give discounts when customers use a particular credit card, debit card, or digital wallet for making payments. Banks usually partner with e-commerce platforms as a form of a ‘barter’ to promote their own banking service in exchange for discounts. The issue now arises of whether the GST would apply to the whole pre-discount amount or the discounted amount.

"While barter transactions are subject to levy under GST, all transactions may not fall within barter and have tax implications on both legs. For instance, the coupon discount recovered by an ECO will completely depend on the facts, nature of the transaction, and intention of the service to be provided, " Abhishek A. Rastogi, Partner at Khaitan & Co, told ET.

Also read: Food delivery services likely to become costlier soon; here’s why

With the new rules being enforced from January 1, 2022 there are other questions, like those around small restaurants which do not pay GST yet, tips, surge fees, delivery fees and packaging charges.

For consumers, however, nothing will change. The consumer will continue to pay 5 percent tax on the food ordered through the apps and that would be routed to the government through different channels.

Also read: How cloud kitchens helped F&B industry survive COVID-19

(Edited by : Shoma Bhattacharjee)

First Published:Dec 29, 2021 8:01 PM IST