As per the latest update shared by Swiggy, there has been a change in the GST compliance for restaurants.
Under Sec. 9(5) of the CGST Act 2017, Government has given a directive that:
- Taxes of restaurants on restaurant services to be paid by E-commerce platform (“ECO”) @ 5%; and
- Taxes on non-restaurant services like selling bakery items, sweets etc to be paid by the restaurant only
All compliance, like raising tax invoice, tax payments, GST, etc, for a restaurant with respect to its services will now be required to be met by the ECO.
This change excludes the restaurants that are tagged along with a hotel having a rack rate of more than Rs. 7,500 and restaurants/items that are classified as bakery, sweet, ice cream, etc. The exclusions will continue to be taxed as per the current scenario and the ECO shall not be required to undertake the compliance.
The above changes are proposed to be implemented by 1st Jan, 2022.
Going forward, Swiggy plans to categorise restaurants mainly under three types:
- Restaurants, providing all restaurant services
- Non-Restaurants, providing single category items like bakery goods, sweets, ice-creams, etc
- Hybrid, a mixture of both
Swiggy will be handling the taxes on these three categories as mentioned below:
- Restaurant category: All the existing food items which have 0% GST, will be priced at 5% GST after the new implementation. This will eventually lead to no change in revenue for a partner but since the overall price of the items to customers will increase hence it might lead to reduced sales.
For example, if they are selling an item for Rs 100 (with 0% GST), after 31st Dec, 21’ item price to the end customer at Swiggy will increase to Rs 105 (100+5 (GST)).
Another change will be that such Restaurants do not have to file GST anymore which reduces the operational cost at their end.
- Non Restaurant category: All the Restaurants who do not have a valid GSTIN will be disabled on Swiggy platform.
- Hybrid Category: They need to file for partial GST for the items which are not at 5% GST. This does complicate the GST filing process for such Restaurants.
Post 1st January 2022, Swiggy will reject all items in the menu update which will not have a GST value attached to it.
Petpooja requests you to configure applicable taxes before 31st December, 2021. If your item/menu prices are inclusive of taxes, please configure backward tax. If you charge price plus tax, please configure forward tax.
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