Recently the government announced that food aggregator and delivery apps would be liable for the collection and deposit of GST on the deliveries they make on the platform.
Well, the open-ended statement has left many wondered if this would impact their bills on the platform.
Well, let’s start by understanding what is the current scenario –
Currently, delivery apps such as Zomato and Swiggy collect taxes from customers but pass on these taxes to the vendor. Now, the government is concerned that this process exposes a large number of restaurants that receive indirect tax from customers but never deposit it to the government. In a move to possibly course correct this, the government is asking delivery applications to collect and deposit taxes on behalf of the restaurants.
Okay! So will this change your bill?
The short answer is No!
You would be charged the same amount as before. But, the risk lies in the survival of small street vendors who have registered on these platforms and have managed to escape tax liability.
Additionally, this new regulation is expected to increase compliance liability for both delivery applications and restaurants.
Let’s hope this move doesn’t change the prospect that the recently growing technology has given to small street vendors.
Thanks for Reading!
Shubham Agarwal (CFA L2 Candidate | MBA candidate at University of Cambridge, UK)
Want to discuss this further or have questions regarding finance/strategy? Feel free to connect here – https://www.linkedin.com/in/shubhamagarwal13/