E-commerce players must pay the tax on restaurant services in cash: CBIC

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NEW DELHI: E-commerce businesses providing catering services will be required to pay the Goods and Services Tax (GST) on these services entirely in cash and cannot pay it against any tax credit they have for their operations, the Central Council of Indirect Taxes and Customs (CBIC) said in a circular.

“E-commerce operators must pay the entire GST in cash (no input tax credit can be used for the payment of GST on catering services provided by e-commerce operators),” said declared the CBIC.

The circular brings clarity to entities such as Zomato engaged in online catering services.

In September, the federal indirect tax body, the GST Council, decided to make e-commerce businesses in the food transportation and delivery sectors subject to tax collection on behalf of drivers and passengers. restaurants. Shifting the burden of collecting taxes from restaurants to e-commerce platforms has been adopted to improve compliance.

“Among various points, one of the points is that e-commerce operators cannot use the input tax credit available in their credit pool to pay the GST on restaurant services. Therefore, this liability should be paid in cash. However, the GST law does not prevent the supplier (including e-commerce operators) from using the input tax credit that is otherwise available with the supplier (e.g. from another business sector). activity) against such a production tax obligation, ”explained Deputy General Sunil Kumar. Manager at Taxmann, publisher of law books.

The CBIC also clarified that e-commerce operators will be required to pay GST on any catering service provided through them, including by an unregistered person. The idea is to improve tax compliance. When a small restaurateur sells food through an online delivery platform, the latter is required to collect the tax from the consumer and pay it to the government.

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