GST
Is GST Being Charged on Food Packaging Fees?
The online food delivery business has grown rapidly in India, with millions of customers receiving food daily through platforms. These orders often incur additional packaging charges, typically ranging from ₹10 to ₹30. Due to the large volume of orders, these charges can accumulate to significant amounts, reaching up to crores.
According to GST rules, any charge taken as part of supplying goods and services is considered taxable. This raises a question: Are restaurants properly collecting and submitting GST on their packaging costs?
Why has the investigation has started?
The GST department has started an investigation suspecting that restaurants might not be paying GST on packaging fees despite charging them. Notices have been issued to major restaurants involved in online delivery, requiring the following information:
- List of orders from January 2022 to the current date
- Packaging cost associated with each order
- GST applied to all these orders
- Amount reported in the return and paid to the government
Leagl Background
As per India’s GST law if there is any Ancilillary service is provided along with principal supply then it is also taxed at the same tax rate.
If the packaging services is considered as a part of order of food then it comes under the category of composite supply.
In this case:
- Main Item: Food
- Anciallary service: Packaging
- Tax rate: the rate is applicable on food (5 % or 8%)
This simple means that the restaurants will have to apply the same GST on packaging charges as on food.
Possible scenarios for Taxability
The following table shows in which situation GST is applicable on packaging charges.
| Scenario | GST Applicability | Reason |
| Packaging charges added to food | Yes | Composite Supply – food and packaging sold together |
| Packaging service sold separately | Yes | Independent Supply – will be considered as a separate service |
| Packaging charge taken but GST not added | No | Incorrect reporting – department may impose fine |
Imapcts on restaurents
The potential impact of this investigation on restaurants that deliver a large number of orders daily includes:
- Tax liability: They may have to pay GST on previous orders if it wasn’t applied earlier
- Interest and penalty: They may face interest or late fees for not paying taxes on time
- Regulatory scrutiny: Restaurants may face scrutiny, which can impact their reputation and business
Impacts on Customers
Customers should pay attention to the bill details. Here are some points to consider:
- Is there a separate amount mentioned in the bill under the name of packaging charge?
- Is GST included in it?
- If not, it could be a sign of tax evasion.
Consumers should review their bills carefully to ensure transparency and compliance with tax regulations.
Conclusion:
This investigation initiated by the GST department on packaging charges makes it clear that now even the smallest charge will not be ignored. Restaurants should make their billing system completely compliant with GST rules, so that any kind of lapse can be avoided.
It is also time for consumers to be aware of their rights and check the bill closely. Transparency and correct tax payment is necessary not only for the government but also for a healthy and accountable business system.