GST 2.0: Food-delivery giants face new ₹500 cr tax bill, margin crunch

Platforms must pay 18% GST on behalf of delivery workers, a move that could squeeze margins and raise consumer costs as growth slows

Food delivery and quick commerce platforms face a new 18 per cent tax burden on delivery services after the GST Council ruled that marketplaces must pay the levy on behalf of previously exempt delivery workers, a move that threatens to squeeze profit margins and raise costs for consumers.

 

 

The September ruling shifts tax liability from unregistered gig workers to e-commerce operators, effectively ending exemptions that had applied to low-value shipments and independent delivery partners across food aggregators and local logistics services.

 

“…The GST Council has clarified that local delivery services supplied through e-commerce operators will now be taxed at 18 per cent GST,” said Sanket Desai, indirect tax partner, consumer products and retail, EY India. “The liability to pay GST shifts from the unregistered delivery partner to the platform under Section 9(5) of the CGST Act.”

 

The ruling covers food delivery, quick commerce, and logistics services, where delivery had been exempt due to low-value shipments or unregistered gig workers operating as contractors.

 

For Swiggy and Zomato, the change is significant as delivery is central to their business. Quick commerce platforms may also face the higher levy on rapid delivery services. Food-delivery players face a fresh tax bill of about ₹500 crore a year after the latest changes in the GST structure, according to analysts and industry executives.

 

“The cost is likely to be passed on to consumers, though companies may absorb part of it over time,” said Satish Meena, founder of research firm Datum Intelligence. “For customers, this may come in the form of higher delivery fees.”

 

Zomato and Swiggy alone may shoulder an additional GST burden of ₹180–200 crore annually. This change comes as growth slows for both companies, adding pressure on margins. “Swiggy is not profitable, and Zomato’s profit declined last quarter. Restaurants want lower commissions, and new competition like Rapido has entered the market,” said Meena. 

 

Analysts said the tax burden will rise as order volumes grow. Swiggy processed about 264 million B2C orders in Q1FY26, pointing to more than 1 billion orders annually if growth holds. It has 540,000 delivery partners.

 

Zomato’s parent Eternal recorded 853 million food delivery orders in FY25, up from 753 million a year earlier. Its network includes 350,000 active delivery partners.

 

The change, effective immediately, is aimed at streamlining compliance and plugging revenue gaps. But industry executives warn it could strain working capital and force platforms to absorb costs or pass them to consumers and delivery partners.

 

“The change aligns with the Council’s broader effort to streamline compliance and plug revenue leakages, but it may also strain platform margins and working capital, especially for food aggregators where delivery is a core service,” said Desai of EY. “It is likely that the GST burden would be passed on to the consumer making local delivery services more expensive.”

 

Reducing payouts to delivery partners is another option, though platforms already face stiff competition for gig workers.

 

The timing adds pressure on companies still chasing profitability after years of cash burn to expand market share and logistics networks.

 

Brokerage Jefferies called the levy “a slight negative for Eternal and Swiggy”. For the June quarter, Zomato posted an operating profit of ₹451 crore, while Swiggy’s food delivery segment reported ₹192 crore.

 

Morgan Stanley said the GST change could hit per-order economics. For Zomato, which charges delivery fees of ₹11–12 in FY25, the potential impact is about ₹2 per order. For Swiggy, with fees around ₹14.5, the hit could be ₹2.6.

 

“We think this is relevant for food delivery and quick commerce operators. Currently GST was not being paid on the delivery fee charged to consumers (wherever considered pass through) by platforms,” Morgan Stanley said in a note. “With this development, platforms will now have to pay 18 per cent GST on the delivery fee irrespective of whether they recognize it as part of revenues or consider it a pass through.”