• Notification Date: 18-12-2024
• Notification No: N/A

GST Council to Clarify Retrospective 5% Tax on Food Delivery Charges and Other Key Decisions

The GST Council, led by Finance Minister Nirmala Sitharaman, is set to meet this Saturday in Jaisalmer with some important decisions on the table. Among the highlights is a proposed 5% Goods and Services Tax (GST) on delivery charges from food delivery apps like Swiggy and Zomato. What’s more, this tax could be applied retrospectively from 2022, potentially creating a tax liability for these platforms, which won’t be able to collect taxes on past orders.

The move comes after the authorities of GST raised a demand of around ?750 crore, arguing that the services of food delivery should be taxed at 18%. Although the proposed levy of 5%, which would not allow input tax credit, is unlikely to influence consumers notably, as delivery charges are typically a small part of the total order cost.

In addition to this, the council is expected to make a notable decision on gene-modified cell therapy, which is being developed for the treatment of advanced blood cancer. The GST on this therapy may be reduced from 12% to zero, thereby offering relief to the sector of healthcare.

The meeting will also provide precision on the tax rate for ready-to-eat popcorn. Popcorn mixed with salt and spices will likely attract a tax of 5%, while those mixed with sugar could face a GST of 18%. In another key decision, the council is expected to uphold an 18% GST on "floor space index" (FSI) and additional FSI charges paid to local authorities by builders. The council has argued that these services are commercial in nature, and the input tax credit available justifies the tax.

As the GST Council meets, these decisions are expected to shape the landscape of business, with a specific focus on fairness and clarity across industries.