Demand to rationalise GST on food delivery biz to 5 per cent

However, thetax complications arising due to the GST is likely to pose aroadblock to this growth, Fooza Foods founder and managingdirector, Dibyendu Banerjea told PTI.The high GST rate of 18 per cent on online fooddelivery service providers and ineligibility of credit of suchGST charged to the restaurants have an adverse impact on thegrowth of the sector.

The restaurants and fooddelivery sector has demanded that goods and services tax (GST)on home delivery of food be reduced to five per cent from 18per cent now to boost the USD 3 billion segment, industryofficials said.

Customers taking food delivery at their home or officeare paying 13 per cent higher price on the same food andbeverages compared to customers who are walking down torestaurants as the dine-in tax rate is 5 per cent, theyclaimed.

''The online food delivery sector in India has beengrowing by leaps and bounds. It is currently worth USD 2.94billion and is growing at a CAGR of 22 per cent. However, thetax complications arising due to the GST is likely to pose aroadblock to this growth,'' Fooza Foods founder and managingdirector, Dibyendu Banerjea told PTI.

''The high GST rate of 18 per cent on online fooddelivery service providers and ineligibility of credit of suchGST charged to the restaurants have an adverse impact on thegrowth of the sector. A reduction in GST rates will keep foodcosts affordable and create more jobs in the sector whilefurthering the government's initiatives,'' he said.

However, restaurateurs said a high commission of 23-24per cent by food delivery platforms have turned out to be apain point even for several months of reopening afterlockdown, footfall for dine-in had not normalised.

''For us, post Covid lockdown our home delivery salesgot revered to 60 per cent which was 40 per cent earlier. Withinability to raise prices, our bottomline is getting hit forhigher commission fees despite sales had reached closer topre-covid levels,'' Platter Hospitality director ShiladityaChaudhury said.

However, he remained optimistic that after a fewmonths once vaccination reaches the mass, the dine-incustomers will return.

''Scalability of business will be most impacted. Growthplans via new franchise outlets for marquee restaurants willbe less feasible. In comparison to the five per cent GST onfood bills, the GST on royalty and franchise fee is 18 percent,'' Banerjea said.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)