GST Council to Clarify Retroactive Taxation on Food Delivery Apps

The GST Council, set to convene on Saturday, is expected to clarify that a 5% levy on delivery charges by apps like Zomato and Swiggy will apply retrospectively from 2022. This move, supported by the fitment committee of top officers, aims to address a tax demand of around Rs 750 crore on delivery apps, where GST authorities have previously sought an 18% levy.

Although the proposal is to impose 5% GST without input tax credit, it is unlikely to significantly burden consumers as delivery charges are a small fraction of the order cost. The council, led by Union finance minister Nirmala Sitharaman, is also expected to provide relief by reducing the tax on gene-modified cell therapy from 12% to nil.

Additionally, the council may clarify tax rates on ready-to-eat popcorn, specifying 5% for those mixed with salt and spices and 18% for those with sugar. The panel has rejected a plea to reduce the tax on electric vehicle components from 18% and 28% to 5% and will clarify that no GST is payable on penal charges levied by banks and finance companies regulated by the RBI.