Zomato gets GST tax demand notice of Rs 803 crore

Food delivery and quick commerce services provider Zomato has received a tax demand notice of Rs 803 crore from the Goods and Services Tax (GST) department.

In a stock exchange filing, the company said this notice has been given by the Joint Commissioner of CGST and Central Excise in Thane. This tax notice includes GST demand and interest and penalty.

“This tax demand notice is for not paying GST on delivery charges. The total amount of Rs 803 crore includes GST demand of Rs 401.7 crore and interest/penalty of the same amount," according to the exchange filling.

The company further said, "We believe that we have a strong case on merits, supported by the opinion of our external legal and tax advisors. The company will file an appeal against the order before the appropriate authority."

Earlier, in January and June this year, Zomato received Rs 4.2 crore and Rs 9.45 crore GST demand notices, respectively.

Zomato in 2023 received a GST demand notice of Rs 400 crore on delivery charges.

Delivery charges are levied by Zomato, Swiggy and other food and quick commerce companies on their services.

“These companies claim that gig workers work as delivery partners. They are paid on an order basis. This delivery charge collected from the users is given directly to the gig worker,” according to reports.

The delivery charge has been considered a service in GST laws, as the platforms are collecting it. Due to this, 18 per cent GST can be levied on delivery.

Zomato recently raised over $1 billion through qualified institutions placement (QIP) of equity shares.

The company's stock was trading flat at Rs 285 apiece on Friday.

In Q2 FY 25, Zomato's total income grew 68.5 per cent year-on-year to Rs 4,799 crore, from Rs 2,848 crore in the same period of the previous financial year. The company's net profit increased 4.8 times to Rs 176 crore in the September quarter.