Retrospective 5% GST likely on food app delivery charge
New Delhi, Dec 18, 2024
Amid its focus on health and term insurance, the GST Council, which will meet on Saturday, is expected to clarify that a 5% levy on delivery charges by apps such as Zomato and Swiggy will apply retrospectively from 2022, and also state that tax has to be paid by builders on charges paid for 'floor space index', including additional FSI, to local authorities.
The fitment committee, comprising top officers, has backed the two moves with the proposal on food delivery apps likely to create a liability as it will not be possible for the players to collect taxes on past transactions.
Although the proposal is to impose 5% GST without input tax credit on food delivery apps, going forward, it will not result in a significant burden on consumers as the delivery charges are a fraction of the cost of orders. The move has been necessitated by a tax demand of around Rs 750 crore on delivery apps, where GST authorities have taken a view that 18% levy should be imposed.
The council led by Union finance minister Nirmala Sitharaman, which will meet in Jaisalmer, is expected to provide major relief by backing a reduction in tax on gene-modified cell therapy, being developed for treatment of advanced blood cancer cases, from 12% to nil. It will also provide some clarity on ready-to-eat popcorn with those mixed with salt and spices should attract 5% tax, while those with sugar should face 18% GST.
Further, the panel of officers has rejected the plea to reduce the tax on components of electric vehicles (EVs) from 18% and 28% to 5% and may clarify that no GST is payable on penal charges levied by banks and finance companies, which are regulated by the RBI.
The committee has concluded that local authorities provide services such as the grant of FSI or additional FSI to businesses in return for consideration, which attracts 18% GST, and there is no justification for an exemption as input tax credit is available. Besides, these services are seen to be commercial in nature and help builders further their business.
[The Times of India]
