Ali Hasan
Are you fed up of paying 18% GST on food deliveries? Well I am and so are millions of foodies like me and you. Now there is a demand to lower the taxes that we have to pay extra just because we don’t walk in a restaurant and order online.
If your order your food online you have to pay 18% GST where as it’s only 5% GST if you walk in a restaurant and dine in. This is insane and foodies don’t like it. The restaurants and food delivery sector has demanded that goods and services tax (GST) on home delivery of food be reduced to 5% from 18% now to boost the $3 billion segment, industry officials said.
Customers taking food delivery at their home or office are paying 13% higher price on the same food and beverages compared to customers who are walking down to restaurants as the dine-in tax rate is 5%, they claimed.
“The online food delivery sector in India has been growing by leaps and bounds. It is currently worth $2.94 billion and is growing at a CAGR of 22 %. However, the tax complications arising due to the GST is likely to pose a roadblock to this growth,” Fooza Foods founder and managing director, Dibyendu Banerjea said.
“The high GST rate of 18% on online food delivery service providers and ineligibility of credit of such GST charged to the restaurants have an adverse impact on the growth of the sector. A reduction in GST rates will keep food costs affordable and create more jobs in the sector while furthering the government’s initiatives,” he said.
However, restaurateurs said a high commission of 23-24% by food delivery platforms have turned out to be a pain point even for several months of reopening after lockdown, footfall for dine-in had not normalised.
“For us, post-Covid lockdown our home delivery sales got revered to 60% which was 40% earlier. With inability to raise prices, our bottomline is getting hit for higher commission fees despite sales had reached closer to pre-covid levels,” Platter Hospitality director Shiladitya Chaudhury said.
However, he remained optimistic that after a few months once vaccination reaches the mass, the dine-in customers will return.
“Scalability of business will be most impacted. Growth plans via new franchise outlets for marquee restaurants will be less feasible. In comparison to the 5% GST on food bills, the GST on royalty and franchise fee is 18 %,” Mr. Banerjea said.
