The Goods and Services Tax (GST) Council has decided to levy 18% GST on delivery charges collected by e-commerce operators like Zomato, Swiggy, Blinkit, and Zepto. This new tax rule will come into effect from September 22, 2025. This means ordering food or quick commerce items through these apps will become costlier for consumers as companies may raise delivery fees or platform charges to cover this tax increase.
What Has Changed?
Earlier, only a 5% GST was charged on restaurant services through these platforms. The delivery charges, however, were either unregulated or under dispute. Now, the GST Council has clarified that delivery services provided through e-commerce platforms will fall under Section 9(5) of the CGST Act, attracting an 18% GST rate. This applies specifically to the delivery charge portion, while restaurant services will continue to be taxed at 5%.
Impact on Consumers and Companies
Food delivery and quick commerce companies are expected to pass this extra tax burden to consumers. According to industry insiders, this could lead to an annual revenue impact of more than Rs 200 crore for delivery firms. This hike may impact both delivery fees and possibly the overall price of food and goods ordered through these apps.
Background and Controversy
E-commerce platforms have argued that they do not provide delivery services directly; instead, delivery partners (often independent contractors) do. The companies said they merely collect delivery fees on behalf of these partners and should not pay GST on that amount. For example, Zomato received a Rs 401.7 crore tax notice for past delivery fees, but they claimed they were not liable for this tax.
On the other hand, food businesses with their own delivery services have been charging only 5% GST on delivery, causing concerns of an uneven tax burden in the market. Despite requests from e-commerce firms and restaurant associations to lower the GST on delivery charges to 5%, the Council opted for a uniform 18% rate across all local delivery services through e-commerce platforms.
What About Other E-commerce Platforms?
The 18% GST on delivery charges does not apply to e-commerce companies like Amazon and Flipkart. Their deliveries are considered ancillary to the supply of goods, not a standalone service.
States’ Views and Future Discussions
Some states, like Uttar Pradesh and West Bengal, suggested matching the food delivery tax to 5%, while others preferred more deliberation. The issue was referred back to the Fitment Committee for further study, and the Council will revisit the matter in future meetings.
