GST Dept Probes Restaurants on Zomato, Swiggy Over Unpaid Tax on Packaging Charges
GST Dept probes restaurants on Zomato and Swiggy for suspected tax evasion on packaging charges, following ongoing investigations into food delivery and service fee compliance.
The Goods and Services Tax (GST) department has launched an investigation into several restaurants for not properly paying tax on packaging charges collected from customers. According to a report by The Economic Times, the focus is on restaurants, especially those listed on food delivery platforms like Zomato and Swiggy, which may have collected GST on packaging fees but failed to deposit...
The Goods and Services Tax (GST) department has launched an investigation into several restaurants for not properly paying tax on packaging charges collected from customers. According to a report by The Economic Times, the focus is on restaurants, especially those listed on food delivery platforms like Zomato and Swiggy, which may have collected GST on packaging fees but failed to deposit it with the government.
GST READY RECKONER: Complete Topic wise Circulars, Instructions & Guidelines- Save 25%CLICK HERE
This is not the first time the GST department has looked into tax compliance in the food delivery space. Earlier investigations had already examined whether restaurants and delivery platforms were correctly collecting and paying GST on food delivery and service charges. In those cases, tax officials found that platforms and restaurants were collecting GST from customers on delivery and service fees, but some were not remitting the full amount, raising red flags over possible tax evasion.
With the new focus on packaging charges, officials are now widening the scope of the investigation. These charges are commonly added to bills for online food orders, especially for takeout and home delivery. The concern is that while customers are charged GST on these packaging fees, the tax may not be reaching the government’s treasury.
In the past few months, several restaurants have received formal summons from the GST department. They have been asked to submit records of GST collected and paid on packaging charges, going as far back as January 1, 2022. These records will help tax officials verify whether businesses have followed GST laws properly.
Read More: New ISD Rules Effective April 2025: How Debit and Credit Notes Affect ITC Distribution
Under GST rules, any business that collects tax from customers is legally required to pass it on to the government. Failing to do so is considered a serious offense and can be treated as tax evasion.
Complete practical guide to Drafting Commercial Contracts - CLICK HERE
Though the investigation is still in progress and no official conclusions have been made yet, the move is to improve compliance in sectors like food delivery and e-commerce, where digital transactions are common but tax practices may vary.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
