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

What is changing (effective Sept 22, 2025)

1. GST at 18% on delivery charges
   Starting September 22, 2025, delivery charges levied by platforms like Swiggy, Zomato, Magicpin for local delivery services will attract 18% Goods and Services Tax (GST). This is separate from GST charged on the food items themselves under the revised/slashed rates.
2. Platform fee hikes
   At around the same time, these food delivery platforms have increased “platform fees” (a charge from the platform to the customer per order, over and above the food cost + delivery). Examples:

Ø  Swiggy has increased to ~ ₹15 (inclusive of GST in some markets).

Ø  Zomato raised its platform fee to ₹12.50 (excluding GST).

Ø  Magicpin to ₹10 per order.

3. Estimated cost impact on consumers

Ø  For Zomato users, the GST addition on delivery charges is estimated to increase cost per order by around ₹2.

Ø  For Swiggy, the estimate is about ₹2.6 per order.

4. Clarifications by Finance Ministry via FAQ
   The Finance Ministry issued FAQ clarifying who is liable to pay this GST, under what circumstances. Key points include:

Ø  Local delivery services are “taxable at 18%.”

Ø  If a registered person supplies the local delivery service directly, that person pays 18% GST.

Ø  If the service is supplied through an E‑commerce Operator (ECO) by a person not registered under GST, the liability shifts to the ECO under Section 9(5) of the CGST Act.

Ø  If a registered person uses an ECO for delivery, then the supplier (registered person) supplying the delivery service pays the tax.

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Why this change is happening (government’s rationale)

Ø  Closing a tax loophole: Previously, many delivery charges by platforms may have been treated as “pass‑through” costs or not clearly taxed at 18%. There was ambiguity about whether such delivery fees are “services” supplied by the platform (or by restaurants) and whether GST is applicable separately on delivery.

Ø  GST rationalisation (“GST 2.0”): This is part of broader reforms where GST slabs, taxable items and exclusions are being rechecked/restructured. Delivery services are being explicitly captured under the taxable base.

Ø  Revenue reasons: As delivery volumes are large and rising (particularly around festive seasons), taxing delivery charges provides revenue gains. Also, clarified liability (registered / unregistered / via ECO) ensures consistent tax collection. This is reflected in estimates that Swiggy/Zomato will face significant additional tax burdens.

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Legal / Tax basis

Ø  Section 9(5) of the CGST Act: This section deals with certain “supplies by ECO (E‑commerce Operator)” and related tax liabilities when the supplier is not registered, etc. The FAQs confirm that delivery services fall under this provision in some supply chain structures.

Ø  Definition of local delivery service: Under GST law, “local delivery” means transporting goods by road or otherwise within a state/local area. The clarified position is that these are taxable services when provided by a registered person or through an ECO.

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Implications

For consumers

Ø  Bills for food delivered via Swiggy/Zomato etc. will be slightly higher, particularly the delivery portion. The increase isn’t huge per order (₹2‑₹3 estimated in many cases), but for frequent users, cost increment adds up.

Ø  Platform fees + GST + delivery fees = more “extras” beyond just the food cost. Many users may end up being more sensitive to these extras.

For platform operators and restaurants

Ø  Revenue vs cost burden: Platforms may choose to absorb some of the cost, or pass it on fully/partially to customers. This could affect platform margins.

Ø  Effect on delivery partners: If platforms look to offset tax burden, they might adjust payouts, or restructure delivery fee amounts. Depending on how fees are split, it's possible delivery partners see reduced take‑home if the platform absorbs GST but reduces compensation elsewhere.

Ø  Competitive dynamics: Restaurants that have their own delivery mechanism (in‑house delivery) may be relatively less impacted since the delivery costs may be considered part of their “own service” rather than “third party local delivery service through ECO.” There could be a cost advantage in ordering directly from such restaurants vs via aggregators.

Tax & compliance implications

Ø  Platforms/ECOs must update billing systems, invoices, and GST returns to reflect this change correctly (delivery fees will now be revenue/taxable under 18%) rather than treating them as pass‑through or non‑taxable.

Ø  Registration status matters: Whether a delivery person or service provider is GST‑registered or not will determine who is liable (supplier vs ECO). Platforms and restaurants need to manage that.

Ø  Audit and documentation: Ensure the services of delivery are properly documented, invoiced; keep track of arrangements with delivery persons / service providers to ascertain whether one is supplying directly or via ECO.

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Potential challenges / ambiguities

Ø  What qualifies as “local delivery service” may vary; distance, whether the platform uses a third‑party delivery partner, whether it's within city/state boundaries, etc. Some orders may be borderline cases.

Ø  Split of delivery vs platform fee vs food cost: Because there are several fees (platform, delivery, surge, etc.), separating them and applying correct GST rates can be tricky in practice, especially in mixed charges.

Ø  User experience / transparency: Some platforms may not clearly show how much of the charge is “delivery fee + GST” vs platform fee vs food cost, which may cause consumer complaints.

Ø  Effect on small/local restaurants: Those who depend heavily on large aggregators may see demand drop if users find direct ordering cheaper. Could change negotiation power.

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Suggested Tips / Takeaways

Ø  Businesses (delivery platforms, restaurants) should check their GST compliance flows, especially how delivery charges are treated, to avoid mismatches or audit risk.

Ø  Check whether your delivery service providers are properly registered so that tax liability is determined correctly (supplier vs ECO vs platform).

Ø  Keep customers informed: transparency in bills helps avoid complaints when consumers see increases after Sept 22. Platforms may want to update app/website interfaces.

Ø  For frequent users, perhaps compare direct ordering vs through platforms ‒ savings might result with restaurants delivering themselves.

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