GST Compliance Burden on Food Delivery Applications & Restaurants

  • From January 1, 2022, Food delivery apps will primarily collect 5% GST with the government, on behalf of the restaurants, for deliveries made by these platforms.
  • This has been proposed by the government with a motive to bring several restaurants under the GST regime.
  • Tax experts suggests that it will create a greater impact on smaller restaurants, with an annual turnover of less than Rs 20 lakh, as they were not required to pay GST before.
  • But after this amendment, restaurants will also have to mandatorily register themselves under GST as is done by e-commerce sellers.
  • There will be an added compliance burden as they will have to keep two separate books of accounts — one for their normal business and second for the business done through these platform aggregators.
  • For the food aggregators, this scheme will increase the burden of compliance towards accounting and collection for the taxes on behalf of the restaurants.
  • This will even discourage some of the restaurant to get off from their platforms
  •  As no new tax that has been introduced it will not impact the customers much.  They will still have to pay 5% GST to order the food online.
  • However, this move may also create some confusion in terms of applicability of input tax credits, for which a clarification expected from the government required by the food aggregators.

 
     
202093 Times Visited