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

    Kolkata, Jan 17 (PTI) The restaurants and food
delivery sector has demanded that goods and services tax (GST)
on home delivery of food be reduced to five per cent from 18
per cent now to boost the USD 3 billion segment, industry
officials said.
    Customers taking food delivery at their home or office
are paying 13 per cent higher price on the same food and
beverages compared to customers who are walking down to
restaurants as the dine-in tax rate is 5 per cent, they
claimed.
    "The online food delivery sector in India has been
growing by leaps and bounds. It is currently worth USD 2.94
billion and is growing at a CAGR of 22 per cent. However, the
tax complications arising due to the GST is likely to pose a
roadblock to this growth," Fooza Foods founder and managing
director, Dibyendu Banerjea told PTI.
    "The high GST rate of 18 per cent on online food
delivery service providers and ineligibility of credit of such
GST charged to the restaurants have an adverse impact on the
growth of the sector. A reduction in GST rates will keep food
costs affordable and create more jobs in the sector while
furthering the government's initiatives," he said.
    However, restaurateurs said a high commission of 23-24
per cent by food delivery platforms have turned out to be a
pain point even for several months of reopening after
lockdown, footfall for dine-in had not normalised.
    "For us, post Covid lockdown our home delivery sales
got revered to 60 per cent which was 40 per cent earlier. With
inability to raise prices, our bottomline is getting hit for
higher commission fees despite sales had reached closer to
pre-covid levels," Platter Hospitality director Shiladitya
Chaudhury said.
    However, he remained optimistic that after a few
months once vaccination reaches the mass, the dine-in
customers will return.
    "Scalability of business will be most impacted. Growth
plans via new franchise outlets for marquee restaurants will
be less feasible. In comparison to the five per cent GST on
food bills, the GST on royalty and franchise fee is 18 per
cent," Banerjea said. PTI BSM
RG RG

(This story has not been edited by THE WEEK and is auto-generated from PTI)