GST Blow: Zomato, Swiggy Face ₹400 Crore Tax Hit, Delivery Workers to Bear the Brunt

India’s top food delivery platforms, Zomato and Swiggy, are staring at an annual GST outgo of ₹400 crore due to a recent tax rule change, which is expected to impact lakhs of gig workers across the country.

New GST Mandate Increases Financial Burden on Platforms

The GST Council has clarified that digital platforms like Zomato and Swiggy must pay 18% GST on delivery charges collected from users on behalf of delivery partners. Previously, since these gig workers were considered outside the GST net, platforms refrained from paying tax on delivery charges. 

This move aims to resolve existing ambiguities regarding tax liability in delivery transactions. However, it has now squarely placed the GST responsibility on the companies instead of the gig workers.

Impact on Delivery Partners’ Earnings

With up to ₹400 crore in annual tax liability to handle, both companies are evaluating how to absorb the cost. News reports suggest that they may reduce payouts to their delivery workers to manage the additional burden. Zomato currently works with over 3,50,000 delivery partners, while Swiggy has more than 5,20,000, many of whom rely heavily on daily earnings. Any reduction in their per-delivery income could significantly impact their livelihoods.

Read More: GST Council Slashes Rates on 396 Items: 10 Things You Should Know Before Making a New Purchase!

Consumers May Also Feel the Heat

While there is a possibility that some of the additional cost may be shifted to users, platforms are cautious about price increases. This comes especially after recent hikes in platform fees, and further increases could reduce order volumes. Instead, passing the impact onto delivery workers presents a more viable short-term option from the companies’ perspective, as per news reports.

Zomato’s Rs 401 Crore Tax Dispute Adds to Concerns

Adding to the woes, in December 2024, Zomato received a notice from Maharashtra’s tax authority demanding ₹401 crore in pending GST dues and an equal amount in penalty over unpaid taxes on delivery fees. The company had planned to contest the order legally. This background adds additional urgency to resolving the new GST-related obligations.

Conclusion

The GST clarification has significant financial implications for top food delivery platforms and may disrupt earnings for lakhs of delivery personnel. With limited scope to increase consumer fees, Zomato and Swiggy may resort to cutting delivery partner payouts, raising concerns over sustainability and workforce satisfaction in the gig economy.

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