GST heat on restaurants: Packaging charges under the scanner

April 15, 2025 Finance Talk Valli Sarvani

Restaurants across India are facing scrutiny from the GST department over packaging charges levied on food deliveries, according to some reports.

The summons, sent to several eateries listed on platforms like Swiggy and Zomato, have sparked concerns about whether proper GST has been paid on these charges since January 2022.

The core issue lies in whether the packaging charges collected from customers were declared and deposited with the government.

In normal practice, any GST collected from consumers, whether for food, delivery, or packaging, is meant to be paid to the state by the service provider.

However, ambiguity persists over who is ultimately responsible for paying the GST on packaging, the restaurant or the food aggregator app.

The GST officials are now demanding detailed tax records from restaurants to verify compliance.

The confusion is compounded by differing interpretations. While food delivery platforms argue that restaurants are responsible for paying GST on packaging as it’s a separate supply, not everyone agrees with this view.

Some experts say that treating packaging as a “distinct supply” adds complexity to the GST framework.

If this classification is accepted, the responsibility for paying GST on packaging would shift to restaurants instead of food delivery platforms. However, due to the lack of a uniform interpretation, the industry remains stuck in a grey area, creating uncertainty for the businesses involved.

This development also revives concerns from late last year, when there was widespread speculation that the government might introduce an additional 5% GST on food delivery apps.

However, during the recent Budget Session, Minister of State for Finance Pankaj Chaudhary clarified that no such move is currently on the table.

As of now, the situation remains fluid. While the government hasn’t officially introduced new taxes on delivery platforms, restaurants are being held accountable for their tax practices, especially when it comes to packaging.

With regulatory focus intensifying, the food delivery ecosystem may soon see clearer guidelines, if not stricter enforcement.

Image Credit: Tiven Gonsalves, CC BY-SA 4.0, via Wikimedia Commons