The recent GST Council decision to impose an 18% levy on delivery charges for food-delivery and quick-commerce platforms is unlikely to weigh heavily on listed entities - Zomato and Swiggy. According to a latest report by JM Financial, the GST impact will be negligible, as both companies already waive delivery fees on a large share of orders.

The report noted that the financial impact will be negligible, since in food delivery, delivery charges are typically waived on nearly two-thirds of orders either through subscription benefits or by exceeding the minimum order value (MOV) threshold.

In the case of quick commerce, Blinkit, the arm of Zomato (Eternal), already collects 18% GST on delivery charges, while Instamart, the grocery delivery arm of Swiggy, waives fees on most orders, the brokerage said.

As per the report, both food-tech companies have recently reduced the MOV for subscription-based customers to ₹99 from ₹199, which is likely aimed at boosting order volumes amid challenging macro conditions.

“In fact, this development is in sharp contrast to their earlier efforts to move up the MOV in order to support unit economics. This is likely because lower MOV adversely impacts the revenue per order as well as lowers delivery charges collected from customers,” the report noted.

The brokerage believes the primary motive behind these recent platform fee hikes is to offset that impact. Since customer demand has so far shown little resistance to higher platform fees, both companies seem confident about raising charges, which also gives a boost to their adjusted EBITDA margins, it added.

Platform fee hikes to balance MOV-driven revenue dip

JM Financial in its report said that Swiggy has hiked its platform fee in the food-delivery segment to about ₹15 per order (including GST), marking the third increase in three weeks. The charge was earlier revised from ₹12 to ₹13, then to ₹14, before reaching the current level.

In a similar trend, Eternal-owned Zomato has also raised its fee from ₹11.8 to ₹14.75 (including GST).

Also, historically, both platforms have passed on GST costs to users through fees like platform, convenience, handling, or small-cart charges, making it likely that the latest levy will also be passed through to consumers, the report noted.

“This makes us believe that any incremental incidence this time around will likely be a pass-through to consumers.”

JM Financial estimates Zomato and Swiggy will deliver around 1,100 million and 800 million food orders, respectively, by FY27. If fully retained, the latest platform fee hikes could have added about ₹2,700 crore to Zomato’s and ₹2,000 crore to Swiggy’s adjusted EBITDA. However, given that MOV has also been lowered, the actual benefit will be relatively lesser, it said.

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