RESTAURANT SERVICES WILL BE IMPACTED BY THE NEW GST STRUCTURE, WHICH WILL TAKE EFFECT ON JANUARY 1, 2022

Food delivery apps, rather than restaurants, will be required to collect and deposit 5% GST with the government beginning January 1 for deliveries performed by the platforms. The government recommended this transfer of responsibility, which was accepted by the GST Council, with the goal of bringing various restaurants that had not been paying taxes into the GST net.

What will happen once this is implemented?

When a customer gets food from Restaurant A through Swiggy or Zomato, for example, the food delivery platform takes the 5% food tax from the customer and sends it on to the restaurant. Despite having significant turnover, the government suspects that some restaurants have failed to deposit their taxes. As a result, from January 1, the food-delivery apps will collect and deposit the tax on behalf of the restaurant. As a result, restaurants will be required to register in the same way that e-commerce companies are required to do. As no new tax has been imposed, consumers will continue to pay the 5% rate on food ordered online. As a result, nothing will change for consumers.

Smaller restaurants, particularly those with an annual turnover of less than Rs 20 lakh, will be the most affected, as they were previously excluded from the GST net. So the aggregator is responsible for tax collection, these smaller restaurants will be required to pay taxes as well.

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