Zomato, Swiggy face Rs 180-200 cr GST burden as delivery fees attract 18% levy; will your food bills go up?

India’s two largest food delivery platforms, Zomato and Swiggy, are bracing for a significant financial hit after the GST Council clarified that delivery fees collected by them will now attract an 18 per cent Goods and Services Tax (GST). The clarification, rooted in Section 9(5) of the Central GST Act, mandates that digital platforms are liable to collect and remit taxes on behalf of service providers in specific sectors, including food delivery.

This long-awaited clarification ends the debate over whether the platforms were responsible for GST on delivery fees. Analysts estimate that the ruling could impose an additional tax burden of around Rs 180–200 crore on the two companies combined. Brokerage Morgan Stanley observed that the move further complicates the revenue models of food-tech platforms, which already face challenges balancing customer affordability with delivery partner compensation.

For Zomato and Swiggy, the timing is critical. Both companies recently reported operating profits—Zomato at Rs 451 crore in the April–June quarter and Swiggy’s food delivery business at Rs 192 crore. But the added GST liability is expected to pressure margins and force adjustments in business models. The platforms had previously absorbed the gap between customer delivery charges and delivery partner payouts as part of their growth strategy, often waiving delivery fees to boost order volumes.

To manage the fiscal impact, both companies are considering passing on a share of the burden to consumers and delivery partners, a report in the Economic Times stated. “This will be partly passed on to delivery workers and will likely reduce their earnings in the immediate term,” a senior Zomato executive confirmed. A Swiggy executive echoed similar plans, saying the company would transfer a portion of the tax costs.

Impact modest, say analysts

Despite these concerns, some analysts expect the overall impact to remain modest. JM Financial, in a recent note, said the move is likely to have a negligible effect on both Eternal-owned Zomato and Swiggy. The brokerage highlighted that in food delivery, nearly two-thirds of order volumes already see delivery charges waived. In quick commerce, Blinkit, owned by Zomato, already applies the 18 per cent GST on delivery fees, while Swiggy’s Instamart waives charges on most orders.

Moreover, the brokerage pointed out that food-tech platforms have historically managed to pass on GST-related costs to consumers across various fee categories. Recent platform fee hikes by both companies reinforce this trend. Swiggy, for instance, has raised its platform fee three times in as many weeks—from Rs 12 to Rs 13, then to Rs 14, and most recently to Rs 15 per order, including GST. Zomato has also increased its platform fee from Rs 11.8 to Rs 14.75 per order, including GST.

At the same time, both companies recently lowered the minimum order value (MOV) for subscription-based orders from Rs 199 to Rs 99. JM Financial noted that while this move may boost order volumes in a weak macro environment, it reduces revenue per order and shrinks delivery fee collections. The recent hikes in platform fees appear designed to offset this impact.

“Demand has remained broadly inelastic to platform fee increases so far, which emboldens food-tech platforms to undertake such hikes. This supports their adjusted EBITDA margins,” JM Financial observed.

Looking ahead, the brokerage projects that Zomato and Swiggy will deliver around 110 crore and 80 crore food delivery orders, respectively, by FY27. It estimates that fee hikes, excluding GST, could have lifted adjusted EBITDA by Rs 270 crore for Zomato and Rs 200 crore for Swiggy. However, with the reduction in MOV, the flow-through benefit may be lower than projected.