The Goods and Services Tax (GST) in India has gone through a major shake-up with what many call GST 2.0. Among its many provisions, one of the most debated is the 18% GST levy on delivery services provided through e-commerce platforms like Zomato and Swiggy.
While food ordered directly from restaurants such as Domino’s continues to attract only 5% GST under restaurant services, orders routed through aggregator apps will now face both the 5% restaurant tax and an additional 18% on delivery.
This change, though technical, has significant implications for consumers, restaurants, and delivery platforms alike. Understanding the policy intent behind this reform is key to making sense of why it was brought in and what ripple effects it might cause.
Why GST 2.0 Was Introduced
The GST Council has been working to simplify India’s tax regime and plug revenue leakages. With multiple slabs earlier, ambiguities often led to disputes and uneven taxation across industries. The new structure under GST 2.0 aims to streamline rates, reduce classification disputes, and make taxation more predictable.
Food delivery was one such grey zone. While restaurant services were taxed at 5%, the status of delivery charges remained unclear. Some platforms collected taxes, others didn’t, and authorities often issued notices over this gap. By imposing 18% GST explicitly on delivery services through e-commerce operators, policymakers have removed this ambiguity.
Why Delivery Is Treated Differently
Restaurants like Domino’s or Pizza Hut manage their own delivery fleets. In these cases, the GST applicable is the standard 5% for restaurant services. But aggregator platforms act as intermediaries, offering not just food discovery but also a separate logistics service.
By bringing delivery through aggregators under the 18% GST bracket, the government is essentially treating delivery as an independent “e-commerce service,” rather than an extension of restaurant dining. This is meant to create fairness between business models, ensuring that if delivery is a standalone service, it must be taxed as such.
Conflicts Between Platforms And The Government
Food delivery has often sat in a regulatory grey zone, and this is not the first time aggregators have clashed with tax authorities.
In 2021, when the GST Council brought restaurant services delivered via platforms under Section 9(5), companies like Zomato and Swiggy were required to collect and remit 5% GST directly to the government. This was done to curb revenue leakages, as several small restaurants were not paying GST despite being listed online.
The uncertainty around delivery charges, however, continued. According to government records, tax authorities issued show-cause notices worth over ₹800 crore collectively to Swiggy and Zomato between 2019 and 2022, arguing that delivery fees should also attract GST.
Platforms contested this, saying delivery charges were simply pass-through payments to gig workers, not revenue. “The sector needed clarity because the litigation risk was huge, and companies were facing mounting compliance costs,” explained Abhishek Jain, Partner at KPMG India, in a tax industry review.
Tax experts largely welcomed GST 2.0 for removing this ambiguity. “From a policy standpoint, this is about leveling the field and ensuring uniform taxation. While it does increase costs for consumers, clarity is better for businesses than prolonged disputes,” noted M.S. Mani, Partner at Deloitte India.
Economic And Policy Rationale
From the government’s perspective, this decision strengthens compliance and widens the tax net. E-commerce delivery has become a booming sector post-pandemic, with millions of orders daily. By clarifying its taxability, the council ensures that this growing revenue stream is not left untapped.
At the same time, the reform balances consumer relief with fiscal prudence. Essentials and packaged goods see reduced GST under GST 2.0, but services like food delivery, seen as discretionary consumption, are taxed higher. This dual approach helps stimulate mass consumption while safeguarding state revenues.
What This Means For Consumers
For the everyday user, the most direct impact is the increase in delivery costs. Platforms have already signalled that they cannot absorb the additional tax and will likely pass it on to customers. This means higher delivery fees, service charges, or even increased base prices of food items ordered online.
On the other hand, those who order directly from restaurants may escape this burden. Chains like Domino’s or even local eateries with their own delivery boys will still charge only 5% GST, making them more attractive to cost-sensitive customers. In the long run, this could subtly change consumer ordering habits.
Also Read: India’s Biggest Retailers Demand Action Against Zepto, Blinkit, and Swiggy
Platforms Vs. Restaurants
This tax reform could tilt the balance between restaurants and aggregator platforms. For years, restaurants have complained about the high commissions and discounting policies of platforms like Swiggy and Zomato. In 2019, the National Restaurant Association of India even ran a #Logout campaign urging customers to order directly.
The new GST structure may unintentionally revive this campaign. If customers begin ordering directly to avoid higher costs, restaurants might regain some independence from aggregator dominance. However, platforms will continue to offer scale, convenience, and discovery that small eateries may struggle to match, so the competitive tug-of-war is far from over.
GST 2.0’s decision to impose an 18% levy on e-commerce food delivery is more than a taxation tweak; it’s a structural signal. The government wants clarity, fairness across business models, and stronger revenue compliance. However, the burden ultimately shifts to customers, who may soon find online delivery noticeably more expensive.
Whether this pushes people back to direct restaurant orders or forces aggregators to innovate with loyalty schemes remains to be seen. What’s certain is that GST 2.0 has redrawn the rules of India’s food delivery economy, and every stakeholder, from policymakers to the person ordering biryani at midnight, will feel its impact.
Images: Google Images
Sources: The Indian Express, Economic Times, The Hindu
Find the blogger: Katyayani Joshi
This post is tagged under: gst 2.0, zomato, swiggy, dominos, food delivery, gst council, india economy, tax policy, indian restaurants, nrai, ecommerce india, consumer rights, foodtech, digital india, indian business, gst reform, food industry india, online delivery, startup india, indian taxation
Disclaimer: We do not hold any right or copyright over any of the images used; these have been taken from Google. In case of credits or removal, the owner may kindly email us.
Other Recommendations:
Swiggy Will Soon Be Delivering Love Advice; Here Are The Details
