“A new GST regime for food delivery applications does not mean a new tax”


The new goods and services tax (GST) regime for e-commerce operators (ECOs) engaged in food delivery such as Zomato and Swiggy will have no impact on consumers, government officials said Monday.

They also claimed that removing the reverse duty structure (IDS) for footwear will lower costs for businesses and lower prices for consumers in the long run.

Food delivery apps

The remarks came at a time when opposition parties, primarily Congress, have said changes to the GST effective January 1 will have an impact on consumers. Congress also said that the postponement of the withdrawal of IDS for the textile sector was made for political reasons due to the upcoming Assembly elections. Following the decisions of the GST Council, CEOs are now required to file the GST replacing restaurants with a tax to be collected from consumers at the rate of 5%.

A senior government official clarified that there was no change in the tax incidence for consumers.

“In fact, this move will reduce the compliance burden and compliance costs of restaurants and cloud kitchens, the savings they could potentially pass on to consumers, thereby lowering the price they pay for delivery orders from. food, ”he said.

Also, this change has reduced the burden on restaurants and cloud kitchens of having to pay taxes and file returns, etc. and, in turn, will reduce their costs.

“This is a trade facilitation measure that will make it easier for restaurants and cloud kitchens in the MSME sector to do business,” the official said.


Opposition parties have alleged that increasing the GST rates on shoes priced at 1,000 a pair or less to 12 percent from 5 percent will negatively affect the common man. According to the official, the double rates of 5% on shoes priced under 1,000 yen and 12% on shoes over 1,000 yen created “operational and interpretation difficulties” for trade and industry. . The lower rate of 5 per cent has resulted in a reversal of duties, as most raw materials used in the manufacture of footwear are subject to an 18 per cent GST.

“The reversal of the tax structure has forced manufacturers and suppliers to file refunds of the accumulated input tax credit. This has increased the compliance burden and costs for businesses. The flat rate of 12 percent GST on all footwear will go a long way in facilitating trade and promoting the ease of doing business, ”he said.


The GST Council, at its emergency meeting on December 31, decided to postpone the removal of the textile IDS. This means that there is a standstill on rates compared to the flat rate of 12 percent from January 1. The opposition alleged that the increase in GST rates in the textile sector was simply postponed for a month in preparation for the election. The decision has not been withdrawn and the same decision will be made after the election, they said.

The Council, after extensive discussions on the representations received from the textile sector and the Government of the State of Gujarat, decided to reconsider the whole issue of GST rates in the textile sector and referred it for detailed consideration to the Group. ministers.

“To say that the Council simply postponed the implementation of the GST rate hike for a month is factually incorrect and misleading,” the official said.

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