India’s food delivery and quick commerce sector is about to face a new cost burden after the Goods and Services Tax (GST) Council decided to charge 18% GST on delivery fees. This decision was taken under Section 9(5) of the Central GST Act and was confirmed by Finance Minister Nirmala Sitharaman on Wednesday.

Until now, food delivery companies like Swiggy and Zomato did not pay GST on delivery charges because these were shown as pass-through costs, not as revenue. The government has now closed this gap, making delivery fees taxable at 18%. The rule will come into effect from September 22.

The additional cost per order may seem small, but it becomes significant when millions of orders are involved. According to Morgan Stanley, Zomato usually charges customers a delivery fee of about ₹11–12 per order. With the new tax, this could mean an extra cost of around ₹2 per order. For Swiggy, which charges around ₹14.5 as delivery fees, the impact could be around ₹2.6 per order.

Blinkit, Zomato’s quick commerce arm, may not be affected as much. This is because Blinkit already included delivery charges as part of its revenue, which was already taxed under GST. For Swiggy’s Instamart, the impact is also expected to be lower, around 80 paise per order, since its average delivery fee is just ₹4.

The timing of this change is crucial. Food delivery and grocery delivery companies are preparing for India’s festive season, which is their busiest time of the year. In recent months, both Swiggy and Zomato have already added multiple charges, such as platform fees, long-distance delivery fees, rain fees, and surge pricing, to increase profits. Currently, Zomato charges ₹12 as a platform fee per order, while Swiggy charges ₹15.

Even a small increase in delivery charges adds up to huge amounts when seen at scale. Together, Zomato and Swiggy handle about five million food orders daily. So, an extra ₹2–3 per order could generate crores of additional revenue, though it also means customers may have to pay slightly more for every delivery.