Food delivery platforms Swiggy and Zomato are preparing for the impact of the Goods and Services Tax, as new regulations have made them responsible for taxes on local delivery services carried out through their platforms. To protect margins, both companies are considering the option of passing on the additional burden to customers, according to people familiar with the matter.
The firms are still analyzing the government notification to assess its implications for operating margins, pricing models, and cash flows.
Industry experts highlight that the impact on food delivery companies will be stronger compared to quick commerce or e-commerce operators, where delivery is treated as a supplementary activity rather than the main service. Since Swiggy and Zomato rely on delivery as their primary offering, the GST ruling could directly affect their cost structure.
Subscription services such as Swiggy One and Zomato Gold may remain unaffected, as these are categorized as value-added benefits rather than delivery charges.
In its 56th meeting, the GST Council clarified that online platforms will now be responsible for paying GST on local delivery services routed through them under Section 9(5) of the CGST Act. The decision seeks to bring transparency in tax liability for platform-based services, while smaller independent delivery agents continue to remain outside the GST compliance net.
Executives in the sector believe that if the tax burden turns out to be significant, it is likely to be transferred to customers. The degree of impact, however, may differ across categories since consumer spending patterns vary depending on disposable income.