Zomato Stock Surges After GST Penalty, Important News for Customers

Zomato, the popular food delivery platform, has been hit with a tax demand and penalty order of Rs 11.82 crore related to GST on export services provided to its subsidiaries located outside India from July 2017 to March 2021. The order was passed by the Additional Commissioner, Central Goods and Services Tax, Gurugram, raising the GST demand of Rs 5,90,94,889, with applicable interest and penalty of the same amount.

In response to this development, Zomato has decided to increase its platform fee on customers by 25 per cent. This means that for every order placed on the platform, customers will now have to pay an additional Rs. 5 as platform cost. The platform fee hike has been implemented in key markets such as the National Capital Region, Bengaluru, Mumbai, Hyderabad, and Lucknow.

This move comes after Zomato had previously raised the platform fee for users from Rs. 3 to Rs. 4 in January. It is worth noting that Zomato’s competitor, Swiggy, already charges a platform fee of Rs. 5 per order.

Following the news of the platform fee increase and the GST penalty, Zomato’s share price declined by over 4.50 per cent on the Bombay Stock Exchange (BSE) in the first trading session after the announcement. The stock opened at Rs 193.00 and touched Rs 197.80, representing a 4.55 per cent jump from its previous close.

Zomato has stated that it believes it has a strong case on merits and will be filing an appeal against the tax demand and penalty order before the appropriate authority. The company clarified that the demand order pertains to GST on export services provided to its subsidiaries located outside India and that it will contest the ruling.