The restaurants and food delivery sector has demanded a reduction in the good and services tax (GST) customers pay to have their food delivered home. To boost the USD 3 billion segment, the industry has demanded the GST be reduced on take-away dishes from 18 per cent to five per cent.
The industry claimed that the customers who have their food delivered pay 13 per cent more than the customers who dine-in at the restaurant, for the same dish. This difference is because of the fact that the dine-in tax rate is 5 per cent, as compared to the 18 per cent tax customers pay for home delivery.
"The online food delivery sector in India has been growing by leaps and bounds. It is currently worth USD 2.94 billion and is growing at a CAGR of 22 per cent. However, the tax complications arising due to the GST is likely to pose a roadblock to this growth," said Dibyendu Banerjea, Fooza Foods Founder and Managing Director. He further shared that the high GST rate of 18 per cent on online food delivery service providers and ineligibility of credit of such GST charged to the restaurants have an adverse impact on the growth of the sector. Instead, a reduction in GST rates will make food costs more affordable and generate more employment in the industry.
With PTI inputs
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