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Zomato faces Rs 402 Cr tax demand over delivery charges

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  1. Zomato received a show cause notice from the Directorate General of GST Intelligence, seeking Rs 401.70 crore in tax liability for the period between October 2019 and March 2022.
  2. The notice is related to the sum collected by Zomato as delivery charges from customers on behalf of delivery partners during that period.
  3. Zomato contends that it is not liable for the tax, as the delivery charge was collected for delivery partners who provided services to customers based on mutually agreed contractual terms.
  4. In January 2022, changes in GST rules mandated food delivery companies like Zomato to pay 5% GST on restaurant services offered, but it did not address delivery charges specifically.
  5. Despite reporting a loss of Rs 251 crore in Q2 FY23, Zomato turned profitable in Q2 FY24 with a profit after tax of Rs 36 crore, marking an 18-fold increase.
SourceEntrackr

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