Zomato trades lower as DGGI issues demand notice to food delivery companies

This notice is a pre-show cause notice alleging non-payment of GST worth over Rs 400 crore from Zomato and Rs 350 crore from Swiggy, the source has said.

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Shares of Zomato opened flat on November 23, a day after it was reported that food delivery companies Zomato and Swiggy had received tax notices for non-payment. At close on November 22, Zomato shares were trading in the red at Rs 116.50. At 10:20am, the stock was trading at Rs 114.40, around 0.78 percent lower.

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On November 22, sources told CNBC-TV18 that the Directorate General of GST Intelligence (DGGI) has issued a GST demand notice to Zomato and Swiggy for non-payment of GST on the delivery fees charged from the consumers for the period between July2017-March 2023. This notice is a pre-show cause notice alleging non-payment of GST worth over Rs 400 crore from Zomato and Rs 350 crore from Swiggy, the source has said.

While the companies have not yet responded to this, the report says that both platforms are likely to contest the notices. The conflict, according to CNBC TV18 sources is that the DGGI states that the companies need to pay GST on service at 18 percent while the industry says that Zomato & Swiggy are platforms that hire gig workers on a per delivery basis and “Swiggy and Zomato are just collecting these fees as a total amount which gets paid to the gig worker. These gig workers are providing the service thus, it is on them to pay GST. But, since each gig worker is below the Rs 20 Lakh threshold they are exempt from GST,” the report said.

Also Read: Zomato logs 2nd straight quarter of profit at Rs 36 crore in Q2, revenue up 71%

Over the past year, shares of Zomato have zoomed over 87 percent with a recent bump seen on the back of strong Q2 results. Moneycontrol recently reported that Zomato recorded a second consecutive quarter of net profit in the September quarter at Rs 36 crore, while revenue rose 71 percent to Rs 2,848 crore on a year-on-year basis for the Q2FY24 period. During Q2FY23, Zomato had reported a net loss.

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