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Budget 2021: Rationalise GST On Food Delivery To 5%, Says Industry Body

A excessive fee of 23-24 per cent by meals supply platforms have turned out to be a ache level

The eating places and meals supply sector has demanded that items and companies tax (GST) on dwelling supply of meals be lowered to 5 per cent from 18 per cent now to spice up the USD three billion phase, trade officers mentioned.

Customers taking meals supply at their dwelling or workplace are paying 13 per cent larger value on the identical meals and drinks in comparison with clients who’re strolling right down to eating places because the dine-in tax fee is 5 per cent, they claimed.

“The online food delivery sector in India has been growing by leaps and bounds. It is currently worth USD 2.94 billion and is growing at a CAGR of 22 per cent. However, the tax complications arising due to the GST is likely to pose a roadblock to this growth,” Fooza Foods founder and managing director, Dibyendu Banerjea advised PTI.

“The high GST rate of 18 per cent on online food delivery service providers and ineligibility of credit of such GST charged to the restaurants have an adverse impact on the growth of the sector. A reduction in GST rates will keep food costs affordable and create more jobs in the sector while furthering the government’s initiatives,” he mentioned.

However, restaurateurs mentioned a excessive fee of 23-24 per cent by meals supply platforms have turned out to be a ache level even for a number of months of reopening after lockdown, footfall for dine-in had not normalised.


“For us, post Covid lockdown our home delivery sales got revered to 60 per cent which was 40 per cent earlier. With inability to raise prices, our bottomline is getting hit for higher commission fees despite sales had reached closer to pre-covid levels,” Platter Hospitality director Shiladitya Chaudhury mentioned.

However, he remained optimistic that after just a few months as soon as vaccination reaches the mass, the dine-in clients will return.

“Scalability of business will be most impacted. Growth plans via new franchise outlets for marquee restaurants will be less feasible. In comparison to the five per cent GST on food bills, the GST on royalty and franchise fee is 18 per cent,” Mr Banerjea mentioned.

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