Food delivery platforms like Zomato and Swiggy have transformed the restaurant industry in India. However, these platforms operate under a unique GST framework governed by Section 9(5) of the CGST Act, 2017. Under this provision, the electronic commerce operator (ECO) is treated as the supplier of restaurant services and is liable to pay GST on behalf of the restaurants.
This article explains the GST treatment of food delivery platforms and restaurant services.
Section 9(5): ECO Liability for Restaurant Services
Section 9(5) of the CGST Act, 2017, empowers the government to notify categories of services where the electronic commerce operator is treated as the supplier. Restaurant services supplied through an ECO are notified under this section. This means:
- The ECO (Zomato, Swiggy) is liable to pay GST on restaurant services.
- The restaurant is not required to pay GST on these supplies.
- The ECO must collect and remit GST at the applicable rate.
GST Rate on Restaurant Services
Restaurant services supplied through an ECO attract GST at 5% , without input tax credit. This rate applies whether the food is delivered or picked up.
Other services provided by the food delivery platforms, such as platform services (listing fees, advertising, etc.), attract GST at 18% .
Delivery Charges
There has been significant debate on the GST treatment of delivery charges. The GST Council has recommended an 18% GST rate on delivery services provided through e-commerce operators. This is separate from the 5% GST on restaurant services.
TCS for Food Delivery Platforms
Food delivery platforms are also required to collect TCS under Section 52 on the net value of taxable supplies made through them. However, services notified under Section 9(5) are excluded from the TCS calculation.
Compliance for Restaurants
Restaurants supplying food through an ECO must:
- Not charge GST on supplies made through the ECO (the ECO is liable).
- Report these supplies in GSTR-1 as supplies through an ECO.
- Reconcile the ECO's reports with their own records.
- File GST returns on time.
Compliance for Food Delivery Platforms
ECOs must:
- Register for GST.
- Pay GST on restaurant services under Section 9(5).
- File GSTR-3B and report the tax paid.
- Collect TCS on other supplies.
- File GSTR-8 for TCS.
Conclusion
Food delivery platforms operate under a unique GST framework where the ECO is liable to pay GST on restaurant services under Section 9(5). Restaurants and platforms must understand their respective obligations to ensure compliance.
At Anuj Desai & Associates, we provide expert advisory services on GST for food delivery platforms, restaurants, and ECOs. Our team can help you navigate the complexities of Section 9(5) and ensure full compliance.
For a confidential consultation, contact us at office@anujdesaiassociates.com or call 9619456656. Visit our website at https://anujdesaiassociates.com or connect with our founder on LinkedIn at linkedin.com/in/ca-anuj-desai-122547230.