Tax relief for Zomato has been granted by the authorities, as a ₹5.9 crore GST demand against the company has been cancelled by the Commissioner (Appeals) in Gurugram. The tax demand was for the period July 2017 to March 2021. Along with penalties, the total amount had reached ₹11.82 crore. Zomato had appealed against this order saying it was unfair and had no merit.
The tax assessment was based on services Zomato provided to its foreign subsidiaries but the reasons for dropping the demand were not disclosed.
Other Tax Struggles Faced by the Company
This is not the first tax case against Zomato. The company has received many GST notices issued by various tax authorities across India. Among these, the highest amount includes GST of ₹803 crore in Maharashtra between 29th October, 2019 to 31st March, 2022. This also includes penalties and interest. Zomato is challenging all these accusations.
The company is denying its involvement in any wrongdoing. The company says it follows all tax laws and is confident of defending itself in these cases. Many digital-first businesses especially those with international operations face similar GST return filing and compliance related issues.
Zomato’s Business Growth and Stock Performance
Despite tax issues, Zomato has reported good growth. For Q3 FY25 quarter, the company saw 64.4% yoy growth in revenue which was ₹5,405 crore against ₹3,288 crore in Q3 FY24. But despite the revenue growth, Zomato’s net profit fell 57.2% to ₹59 crore in the same quarter.
In November 2024, Zomato raised ₹8,500 crore ($1 billion) through QIP. Next month, Zomato became the first Indian startup to be added to the BSE Sensex 30 replacing JSW Steel.
Despite this good performance, Zomato’s stock is under pressure. As of the latest trade, it closed 2% lower at ₹233 on the NSE. Zomato has seen 66% growth in stock price in the last one year but 12% fall in the last month due to market volatility and investors concerns on ongoing legal issues.
Bigger Picture: GST Compliance in Focus
Cancellation of ₹5.9 crore tax demand is good news for Zomato but ₹803 crore GST dispute is still pending. Results of these appeals will impact Zomato’s financials and compliance.
For now, tax relief for Zomato is a small win. But the company is still under the radar as authorities are reviewing its past tax filings. The outcome of these cases will decide whether Zomato faces more financial penalties or gets out stronger from these legal battles.
Moreover, If you want any other guidance relating to GST Registration, GST Return Filing or GST Updates, please feel free to talk to our business advisors at 8881-069-069.
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