Zomato, Swiggy may pass on Rs 180-200 cr GST hit to delivery partners, customers: Report
&imwidth=600&imheight=450&format=webp&quality=medium "Zomato, Swiggy may pass on Rs 180-200 cr GST hit to delivery partners, customers: Report")
A deliveryman working for Zomato, an online food delivery application, rides a motorbike along a street in Mumbai. Photograph: (AFP)
GST Reforms 2025: Zomato, Swiggy will have to find the delicate balance between generating revenue and maintaining customer volume through affordability.
Zomato and Swiggy, India's two largest food delivery platforms, are bracing for the financial impact of the GST Council's clarification that they will have to shell out 18 per cent GST on delivery fees. Experts estimate that the ruling has paved the way for an additional combined tax burden of around Rs 180-200 crore.
The additionaltax burden may be troublesome for these two platforms, which largely changed the way people order food from outside in India, as they already struggle with balancing earnings with the affordability of food for their customers.
Both Zomato and Swiggy have registered operational profits in the previous quarter. This additional GST burden might change the structure of their business, as they will have to find a delicate balance between revenue and the volumes of orders they receive from customers. Steep delivery charges may dissuade customers from using the platforms. Earlier, these companies used to absorb delivery charges to boost volumes.
Delivery partners to bear the brunt?
The Economic Times reported that both companies are mulling over passing on a share of the tax burden to customers and delivery partners.
"This will be partly passed on to delivery workers and will likely reduce their earnings in the immediate term,” a senior Zomato executive confirmed.
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However, some analysts said the impact of the tax burden would be modest because the two firms already waive delivery charges under various offers.
The two companies have often passed on GST-related costs to consumers.
JM Financial told Business Today that both companies lowered the minimum order value (MOV) for subscription-based orders.
“Demand has remained broadly inelastic to platform fee increases so far, which emboldens food-tech platforms to undertake such hikes. This supports their adjusted EBITDA margins,” JM Financial added.