Swiggy, Zomato To Pay 5% GST From Today Amid New GST Norms

Beginning Saturday, food aggregators such as Swiggy and Zomato will be required to collect and pay a 5% tax, broadening the tax base by making food suppliers who are currently outside the GST threshold liable for GST when offered through these online platforms.

Restaurants that are GST-registered are currently collecting and submitting the tax. In addition, beginning January 1, cab aggregators like as Uber and Ola will be required to collect a 5% Goods and Services Tax (GST) when booking two- and three-wheeler vehicles. From Saturday, all footwear, regardless of price, will be subject to a 12% tax.

Beginning Saturday, food aggregators such as Swiggy and Zomato will be required to collect and pay a 5% tax, broadening the tax base by making food suppliers who are currently outside the GST threshold liable for GST when offered through these online platforms.

Restaurants that are GST-registered are currently collecting and submitting the tax. In addition, beginning January 1, cab aggregators like as Uber and Ola will be required to collect a 5% Goods and Services Tax (GST) when booking two- and three-wheeler vehicles. From Saturday, all footwear, regardless of price, will be subject to a 12% tax.

EY India Tax Partner Bipin Sapra said, "this change will have an immediate impact on working capital of tax payers who are currently availing credit of 105 per cent of matched credit. The change will also mandate industry to validate that the procurements are made from genuine and compliant vendors."

Other anti-evasion measures that will take effect in the new year include requiring Aadhaar authentication when claiming GST refunds and restricting the GSTR-1 filing facility for businesses that have not paid taxes or filed GSTR-3B in the preceding month.

Currently, the legislation prohibits businesses from filing a report for outward supplies, or GSTR-1, if they have not filed a GSTR-3B for the previous two months.

Businesses file GSTR-1 for a given month by the 11th day of the following month, but GSTR-3B, which is used to pay taxes, is filed in a staggered fashion between the 20th and the 24th day of the following month.

In addition, the GST law has been revised to allow GST officers to visit premises without a prior show-cause notice to recover tax dues in circumstances where taxes paid in GSTR-3B are lower due to suppressed sales volume than supply information provided in GSTR-1.

While the amendment is anticipated to reduce the practise of passing input tax credit by declaring in GSTR-1 without paying taxes in GSTR 3B, legitimate disparities between GSTR-1 and GSTR 3B, such as carry forward of unadjusted credit notes, are likely to be subjected to undue scrutiny, according to Sapra.

The measure is meant to reduce the risk of fraudulent invoicing, in which sellers report larger sales in GSTR-1 to allow customers to claim ITC, but reduced sales in GSTR-3B to reduce GST liabilities.

E-commerce operators are now obliged to pay GST in lieu of restaurants, according to Nexdigm Executive Director (Indirect Revenue) Saket Patawari, and the government's tax base may increase as a result of this, as these operators will be accountable to GST even for unregistered restaurants.

"E-com operators may be asked to obtain registration in each State where restaurants are located even if they don't have presence and undertake all the regular GST compliances even if they don't have any infrastructure in the State. It may become a challenge to handle audits and investigations in all the states esp. for start ups and new E-com operators," Patawari added.

This modification, according to Sapra, will also broaden the tax base because food merchants who are currently outside the GST threshold will be liable for GST if their services are offered through these online platforms. As a result, purchasing through these platforms is more expensive.

"Given that restaurants sometimes supply goods along with restaurant services, an invoice may have multiple payments by multiple people and hence would involve complexity of operations. This practice of laying burden on E-Commerce operators for supplies made through them is putting additional burden on a platform which is just facilitating the supply," Sapra added.