Swiggy, Zomato deliveries to cost more from Sept 22. Finance Ministry explains the why & how behind it

Food delivery through platforms such as Zomato, Swiggy and Magicpin will become more expensive for consumers from September 22, with an 18% GST now applicable on delivery charges. The levy comes in addition to the recent increase in platform fees imposed by these companies ahead of the festive season.

Swiggy has hiked its platform fee to Rs 15, inclusive of GST, in select markets.

Rival Zomato has raised its platform fee to Rs 12.50 (excluding GST), whereas the third-largest food delivery player, magicpin, has also revised its platform fee to Rs 10 per order, in line with broader industry trends, making it expensive for food delivery consumers.

Estimates suggest that the additional burden on account of 18 per cent GST to be levied on delivery charges from September 22 is expected to add roughly Rs 2 per order for Zomato users and Rs 2.6 for Swiggy customers.

The Finance Ministry, in its FAQs released on Tuesday, explained the rationale for imposing GST on local delivery services. Here's what the Finance Ministry said:

• The services of local delivery are taxable at 18%.
• If such services of local delivery are supplied directly by a registered person: GST@18%payable by that person.
• If such services of local delivery are supplied through ECO by a person who is not liable to be registered: GST @ 18% payable by the ECO under section 9(5).
• If such services of local delivery are supplied through ECO by a registered person: GST@18% is payable by the supplier of the local delivery service, i.e., the registered person supplying through ECO.

Meanwhile, platform fees have emerged as an additional source of revenue for food delivery players in the recent past.

The simultaneous hikes by Zomato, Swiggy and Magicpin underline a growing trend of rising costs in India's food delivery sector, raising questions about whether affordability and convenience can still go hand in hand for millions of customers.