Zomato and Swiggy receive GST notices totaling Rs. 750 crore
The Directorate General of GST Intelligence (DGGI) has slapped food delivery giants Zomato and Swiggy with Goods and Services Tax (GST) demand notices, amounting to Rs. 400 crore and Rs. 350 crore, respectively. This move stems from the DGGI's belief that food delivery is a service, making both companies liable for GST payments. This development follows a 2022 directive requiring Zomato and Swiggy to collect and deposit a 5% tax on their orders, a responsibility previously held by GST-registered restaurants.
There is a disagreement over delivery charges
Both Zomato and Swiggy charge customers a delivery fee, which they argue covers the cost incurred by delivery partners who deliver food door-to-door. The companies collect this fee from customers and pass it on to their delivery partners. However, GST officials view this issue differently. Last month, Swiggy raised its platform fee from Rs. 2 to Rs. 3 for food orders, further muddying the waters. Zomato's shares closed 1.03% lower on the NSE at Rs 115.30 apiece on Wednesday.
Zomato's Q2 financial performance
In Q2 FY24, Zomato posted a consolidated net profit of Rs. 36 crore, a significant improvement from a net loss of Rs. 251 crore in Q2 FY23. The net profit skyrocketed by 1,700% from Rs. 2 crore in the previous quarter. Revenue from operations surged by 71.46% to Rs. 2,848 crore during the quarter under review, compared to Rs. 1,661 crore last year. The gross order value across Zomato's B2C businesses experienced a 47% YoY growth, reaching Rs. 11,422 crore.
