GST 2.0: Domino’s and Direct Restaurant Orders Gain Advantage Over Zomato and Swiggy
India's Goods and Services Tax (GST) reform, dubbed GST 2.0, is set to reshape the food delivery landscape. Effective from September 22, 2025, the new tax structure introduces significant changes that favor quick-service restaurants (QSRs) with in-house delivery networks, such as Domino’s, over third-party platforms like Zomato and Swiggy.
What Is GST 2.0?
GST 2.0 simplifies India's complex four-tier tax system into a two-tier structure: 5% for essentials and 18% for standard goods and services. A 40% rate applies to luxury and sin goods. This overhaul aims to stimulate consumption and improve compliance .
Impact on Food Delivery Platforms
Under the new regime, delivery services provided by electronic commerce operators (ECOs) like Zomato and Swiggy will attract an 18% GST, in addition to the existing 5% GST on restaurant services. This dual taxation could increase the overall cost of food delivery for consumers
Advantages for Domino’s and Direct Orders
Domino’s, with its own delivery network, charges only the 5% GST applicable to restaurant services. Even when orders are placed through platforms like Zomato or Swiggy, the 18% GST on delivery does not apply, making direct orders more cost-effective for consumers
This tax arbitrage incentivizes customers to order directly from restaurants, bypassing third-party platforms and potentially reducing delivery costs.
Financial Implications for Delivery Platforms
Zomato and Swiggy are projected to face an additional annual GST liability of ₹180–200 crore each due to the new tax on delivery services To mitigate this impact, both companies are considering passing the increased costs onto consumers or delivery partners, which could lead to higher service fees and reduced earnings for delivery personnel
Strategic Shifts in the Food Delivery Ecosystem
The introduction of GST 2.0 may prompt a shift towards direct ordering models, empowering restaurants to regain control over customer relationships and reduce dependency on third-party platforms. This change aligns with the National Restaurants Association of India's (NRAI) previous #Logout campaign, which advocated for customers to order directly from restaurants to avoid high commissions and platform fees
Frequently Asked Questions (FAQ)
1. What is GST 2.0?
GST 2.0 is India's revised Goods and Services Tax structure, simplifying the previous four-tier system into two main rates: 5% for essentials and 18% for standard goods and services, effective from September 22, 2025.
2. How does GST 2.0 affect food delivery costs?
Food delivery platforms like Zomato and Swiggy will incur an additional 18% GST on delivery services, potentially increasing overall delivery charges for consumers.
3. Why are direct orders from Domino’s more cost-effective?
Domino’s operates its own delivery network and charges only the 5% GST on restaurant services. Even when orders are placed through third-party platforms, the 18% GST on delivery does not apply, making direct orders more economical.
4. Will Zomato and Swiggy increase their delivery fees?
To offset the new GST liabilities, Zomato and Swiggy may raise their delivery fees or adjust platform charges, leading to higher costs for consumers.
5. How can consumers minimize delivery costs?
Consumers can minimize delivery costs by ordering directly from restaurants with in-house delivery services, thereby avoiding the additional 18% GST on delivery charges imposed by third-party platforms.
Published on : 8th September
Published by : Selvi
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