Zomato & Swiggy Expected to Hike Delivery Charges as Platform Fees Face New GST Rules
Customers ordering food via platforms like Zomato and Swiggy may soon see an uptick in their bills. The government’s decision to apply the Goods and Services Tax (GST) to platform service fees—charges that both companies levy on restaurants—will likely ripple through the ecosystem, ultimately raising delivery costs for end users.
Historically, restaurants paid these platform fees (ranging between 10–25%) under the earlier tax regime without being charged directly. With the new GST inclusion, restaurants will face added tax burdens. And as pressure mounts on them to absorb these costs, there's a clear path toward passing them on—by increasing menu prices or delivery charges via the app.
For Zomato and Swiggy, absorbing this GST is not viable. Both have consistently operated on thin margins—sometimes to negative. The added tax will push up operational costs on an already delicate balancing act between commission rates, marketing spends, and rider incentives. Rising costs are therefore expected to prompt these platforms to recalibrate their fee structures, inevitably affecting consumer rates.
Moreover, food delivery platforms are likely to reevaluate their pricing strategies, potentially through new convenience fees or surcharges to share tax burden with consumers and restaurants alike. This also poses a compliance challenge: platforms must now accurately segregate and display GST on invoices—a technical, operational upgrade.
This shift comes amid rising expenses in delivery business models already grappling with high competition, logistical costs, and evolving consumer expectations. The impending GST change adds another layer of complexity, forcing platforms to balance regulatory adherence with customer retention and restaurant partnerships.
In short, while the GST move seeks to streamline taxation, it may raise delivery pricing for Indian consumers, tweak platform commissions, and demand revised operational systems. The final impact will hinge on how platforms, restaurants, and regulators navigate these changes together.
Historically, restaurants paid these platform fees (ranging between 10–25%) under the earlier tax regime without being charged directly. With the new GST inclusion, restaurants will face added tax burdens. And as pressure mounts on them to absorb these costs, there's a clear path toward passing them on—by increasing menu prices or delivery charges via the app.
For Zomato and Swiggy, absorbing this GST is not viable. Both have consistently operated on thin margins—sometimes to negative. The added tax will push up operational costs on an already delicate balancing act between commission rates, marketing spends, and rider incentives. Rising costs are therefore expected to prompt these platforms to recalibrate their fee structures, inevitably affecting consumer rates.
Moreover, food delivery platforms are likely to reevaluate their pricing strategies, potentially through new convenience fees or surcharges to share tax burden with consumers and restaurants alike. This also poses a compliance challenge: platforms must now accurately segregate and display GST on invoices—a technical, operational upgrade.
This shift comes amid rising expenses in delivery business models already grappling with high competition, logistical costs, and evolving consumer expectations. The impending GST change adds another layer of complexity, forcing platforms to balance regulatory adherence with customer retention and restaurant partnerships.
In short, while the GST move seeks to streamline taxation, it may raise delivery pricing for Indian consumers, tweak platform commissions, and demand revised operational systems. The final impact will hinge on how platforms, restaurants, and regulators navigate these changes together.