The GST Council is meeting on October 8 with several changes to the tax system on its agenda. One proposal that could directly affect consumers is a possible cut in GST on online food and e-commerce delivery charges from 18% to 5%.

The proposal covers delivery services charged by platforms such as Swiggy and Zomato. If approved, it could reduce the tax component added to delivery fees paid by customers.

Why is this being considered?

At present, food ordered through online platforms is generally taxed at 5% GST, while the delivery charge can attract 18% GST separately.

The proposed change would bring the delivery charge closer to the GST rate applied to restaurant services, making the tax structure simpler for customers and businesses.

For example, if a customer pays a separate delivery fee while ordering food online, the GST charged on that fee could be lower if the proposal is approved.

ITC relief also on the agenda

The Council is also expected to discuss Input Tax Credit (ITC) rules.

In simple terms, ITC allows a business to reduce the tax it has already paid on certain purchases and expenses from the tax it needs to pay to the government.

Proposals under discussion could provide greater ITC relief to businesses such as hotels, restaurants and fitness centers that currently face restrictions on claiming such credits.

Other issues before the GST Council

The meeting is not only about tax rates. The Council is also expected to consider measures to make GST compliance easier, including faster refunds, simpler registration and changes to enforcement rules.

A proposal to change GST officers' arrest powers and make the system more focused on serious tax violations rather than routine compliance issues is also being discussed.

However, the 5% delivery-charge rate is still a proposal. The GST Council will have to approve it before it becomes a final rule.

For consumers, the main takeaway is simple: if the proposal is approved, ordering food or goods online could become slightly cheaper because the GST on delivery charges would fall from 18% to 5%.