Zomato and Swiggy, leading food delivery platforms, have reportedly been slapped with a hefty Rs 500 crore GST each amid an ongoing dispute with tax officers over the classification of the delivery fee. The dispute revolves around nearly Rs 1000 crore related to the delivery fee, according to reliable sources.

Silent Responses

When approached for comments, both Zomato and Swiggy remained tight-lipped. Zomato refused to provide a statement, and Swiggy chose not to comment on the matter.

Defining ‘Delivery Charge’

Zomato and Swiggy contend that the ‘delivery charge’ is merely a pass-through of the costs incurred by delivery partners who transport food from door to door. They argue that these costs are collected from customers and transferred to the delivery partners. However, tax officials reportedly disagree with this interpretation.

Fee Adjustments and Platform Charges

Last month, Swiggy made headlines by increasing its platform fee from Rs 2 to Rs 3 for food orders. A Swiggy spokesperson emphasized that this adjustment is in line with common industry practices. In April, Swiggy had introduced a platform fee of Rs 2 per order, irrespective of the cart value. Zomato followed suit in August, raising its platform fee to Rs 3 per order from the initial Rs 2. Interestingly, Zomato began applying the platform fee to Zomato Gold users, who were previously exempted.

The developments highlight an ongoing tussle between food delivery giants and tax authorities, with significant financial implications for the industry players.