GST Council Imposes 18% Tax on Delivery Fees, Impacting Zomato and Swiggy

The GST Council has brought food delivery platforms under a clearer tax framework, mandating an 18% GST on delivery fees under Section 9(5) of the CGST Act—a move that significantly impacts Zomato and Swiggy. Previously, delivery charges were often treated as pass-through costs, escaping consistent taxation. Now, the platforms must pay GST on these fees, potentially adding ₹2 per order for Zomato and ₹2.60 for Swiggy, based on current average delivery charges. Notably, Blinkit (owned by Zomato) faces no incremental impact, as it already collected GST on delivery. However, Swiggy Instamart will see an added ₹0.80 per order. Morgan Stanley warns the new rule could either pressure profitability if costs are absorbed or affect demand if passed on to consumers. The decision also brings clarity to ongoing state-level GST disputes, potentially resolving past tax demands. As India’s food delivery sector recalibrates, companies may need to revise pricing and cost strategies—balancing compliance, margins, and customer affordability in a competitive market.