Discount coupons given by Zomato and Swiggy would be scrutinised and scanned by the Income Tax authorities under the GST regime in January. The inquiry is concerned about the coupon savings given by meal delivery apps when paying with a certain credit card, debit card, or digital wallet. Furthermore, the agreement established between restaurants and the applications that serve as the foundation for these discounts might be a focus of the investigation. Zomato and Swiggy will be handled similarly as restaurants beginning January 1, 2022. As a result of this arrangement, applications such as Swiggy and Zomato may be required to pay a 5% tax on the overall cost of food.
Unlike ordering food from a restaurant, meal delivery apps, which operate as e-commerce operators, provide discounts at multiple transaction points based on the use of a certain method of payment, such as a debit/credit card, digital wallet, or more. Customers are also offered additional discounts if they order more than a certain quantity or from a certain restaurant. One of the key considerations here is whether the 5% GST should be paid on the original price or the reduced price.
Swiggy and Zomato have most of the time made deals with banks. According to insiders, this arrangement may be deemed “barter” in exchange for the advertising of financial services or credit cards. Swiggy and Zomato’s “barter” arrangements are being investigated by the tax authority. Under GST, nothing is free, and even barter is taxed.
Both corporations are also concerned about the indirect tax implications of the additional costs they charge clients. Small eateries or dhabas, in most circumstances, do not pay GST. If clients ordered meals from these establishments, the onus of GST would rest on the delivery apps.
