Lucknow: Union Finance Minister Nirmala Sitharaman on Friday said the GST Council has decided to charge food delivery platforms such as Swiggy and Zomato a tax even as it extended concessional tax rates on certain COVID-19 drugs by three months till December 31. Giving further details, Sitharaman said a 5 per cent GST will be levied at the point where the delivery is made by Swiggy and Zomato.Also Read - Swiggy to Roll Out 2-Day Paid Monthly Period Time-Off Policy to Female Delivery Partners; Opt More Initiatives

“The e-commerce operators Swiggy, Zomato will have to pay GST on restaurant service supplied through them and the tax will be charged at point of delivery,” Sitharaman said. Also Read - RBI Imposes Rs 1 Crore Penalty On Paytm Payments Bank | Here's Why

She also added that the GST has been exempted on muscular atrophy drugs like Zolgensma and Viltepso, which cost crores of rupees. She said that the GST Council also extended the period of concessional GST rates on certain COVID-related drugs by three months till December 31 but decided not to give the same benefit to medical equipment. Also Read - Watch: #Reject Zomato Trends On Twitter After A Customer Was Asked To Learn ‘Hindi’

As the decision has been taken, now the e-commerce operators Swiggy, Zomato would be given a certain time to make changes in their software to allow for such tax to be charged.

After the approval from the GST Council, the food delivery apps will have to collect and deposit GST with the government, in place of restaurants, for deliveries made by them. There would be no extra tax burden on the end consumers.

As per estimates, tax loss to exchequer due to alleged under-reporting by food delivery aggregators is Rs 2,000 crore over the past two years. Under GST, these apps are currently registered as Tax Collectors at Source (TCS).

One of the reasons for designing such a proposal was that there was no mandatory registration check by Swiggy / Zomato and there were unregistered restaurants supplying through these apps.

Analysis of returns filed by delivery apps and the restaurant services for the state of Haryana showed that for Zomato, the gap in taxable turnover for suppliers where TCS was deducted by Zomato was greater than the turnover declared by such suppliers. Therefore, there was evasion of tax.

Similarly, in the case of Swiggy, there was a gap in taxable turnover for suppliers where TCS deducted by the app was greater than the turnover declared by such restaurant suppliers.