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yesterday

GST Council Sets 18% Levy on App-Based Delivery Fees From Sept. 22

Designating platforms as deemed suppliers under Section 9(5) ends a long dispute, setting up pricing and payout adjustments as firms rework compliance.

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The GST Council has clarified that local delivery services, currently taxed at 18% with ITC, will continue at the same rate with no change.
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Overview

  • Local delivery services routed through electronic commerce operators will be taxed at 18% under Section 9(5) of the CGST Act starting September 22, with platforms liable to collect and remit the tax.
  • Zomato and Swiggy must retool billing and compliance as tax experts warn of constrained input tax credit, adding pressure to margins and cash flows.
  • Brokerage estimates peg the annual impact in the roughly Rs 180–200 crore range, with Morgan Stanley calculating an added cost of about Rs 2 per Zomato order and Rs 2.6 for Swiggy.
  • Both companies are evaluating pass-through options, with reports indicating a shared burden between customers and delivery partners, and recent platform fee hikes already in place.
  • Quick-commerce units such as Blinkit and Instamart are seen relatively less exposed because delivery is often included in revenue or waived, while subscription deliveries may see limited immediate changes.