GST Council can reduce tax on food delivery charges

There may be good news for e-commerce food delivery companies like Zomato and Swiggy. According to reports, GST Council may reduce the tax on food delivery charges. At present 18% GST is applicable on these services, but there is a proposal to reduce it to 5%. According to sources, this change may come into effect from January 1, 2025. However, after this decision, delivery platforms will not get the benefit of input tax credit.

Why was there a demand for reduction in GST?

E-commerce companies had requested the Central Government to make the tax on food delivery charges at par with that of restaurant services. Eating in restaurants attracts 5% GST, while food delivery attracts 18% GST. To remove this inequality, there has been a demand for tax cuts.

Shares of Zomato and Swiggy rise

This year, there has been a tremendous rise in the shares of Zomato and Swiggy:

• Zomato’s share:
  • Has climbed 136% so far in 2024.
  • On December 17, Zomato stock was trading at Rs 295.85 with a gain of 0.58%.
• Swiggy Share:
  • It has gained 38% since its listing on November 14, 2024.
  • On December 17, Swiggy shares were trading at Rs 586, down 1.65%.

Swiggy recently launched rapid delivery service ‘Bolt’, which guarantees food delivery to customers within 10 minutes.

Axis Capital’s investment advice in Swiggy

Axis Capital has advised to invest in Swiggy shares. Axis Capital believes that there are excellent investment opportunities in Swiggy.

• The target price of Swiggy shares has been kept at Rs 640.
• This stock can increase by 20% from the current price.

Swiggy CEO (Food Marketplace) Rohit Kapoor said that customers want speed and convenience in food delivery, and Bolt service fulfills this need.

Swiggy’s ‘One BLCK’ program

Swiggy has recently launched a special membership program ‘One BLCK’. This is an invite-only membership, in which customers will get a new experience of food delivery.

Benefits of ‘One BLCK’ Program:

• On-time delivery guarantee
• All benefits of Swiggy One Membership

Zomato and Swiggy shares likely to rise due to GST cut

Market experts say that if the GST Council reduces the tax on food delivery charges, then there can be a big rise in the shares of Zomato and Swiggy.

• Tax cuts will reduce consumer spending and increase demand for food delivery platforms.
• This news may prove beneficial for investors.