Zomato, Swiggy get GST demand notices of Rs 750 cr dues from DGGI, says report

The DGGI raised the tax demand as it believes that since food delivery is a service, Zomato and Swiggy are liable to pay GST.

The Directorate General of GST Intelligence has issued Goods and Services Tax (GST) demand notices to food aggregators Zomato & Swiggy, a news report said on Wednesday.

Zomato and Swiggy have received GST notices worth Rs 400 crore and Rs 350 crore, respectively, CNBC TV-18 reported.

The DGGI raised the tax demand as it believes that since food delivery is a service, Zomato and Swiggy are liable to pay GST.

Zomato’s shares closed 1.07 per cent lower at Rs 15.25 apiece on Wednesday.

Both online food delivery platforms charge some money from customers in the name of delivery fees. As per Zomato and Swiggy, 'delivery charge' is the cost borne by the delivery partners who go to deliver food from door to door.

 

Companies simply collect that cost from customers and pass it on to delivery partners. But GST officials differ on this front.

In 2022, Swiggy and Zomato were asked to collect and deposit tax at 5 per cent rate on their orders. Before that, restaurants registered under GST were only collecting and depositing the tax.

Last month, Swiggy increased the platform fee from Rs 2 to Rs 3 for food orders.

Zomato Q2 results

Zomato's consolidated net profit in the September quarter stood at Rs 36 crore. In Q2 FY23, its consolidated net loss stood at Rs 251 crore. As compared to Rs 2 crore in the previous quarter, the net profit was up 1,700 per cent.

The company's revenue from operations was up 71.46 per cent to Rs 2,848 crore during the quarter under review against Rs 1,661 crore last year. In the previous quarter, it had reported revenue from operations of Rs 2,416 crore. This is a rise of 17.88 per cent.

The total income for Q2FY24 came in at Rs 3,060 crore, compared to Rs 1,831 crore y-o-y, registering a rise of 67.12 per cent. On a q-o-q basis, the total income was up 17.82 per cent. It was Rs 2,597 crore in Q1FY24.

Revenue from operations went up 71 per cent year-on-year (YoY) to Rs 2,848 crore, which is also higher than Street expectations of Rs 2,607 crore.

The gross order value (GOV) across its B2C businesses (food delivery + quick commerce + going-out) grew 47 per cent YoY to Rs 11,422 crore.

Source::: BUSINESS TODAY,  dated 22/11/2023.