Zomato hikes platform fee, discontinues intercity delivery service

Online food delivery platform Zomatohas increased its platform fee by 25% to Rs 5 per order. The company has also suspended its intercity delivery service, Intercity Legends.

These developments come on the heels of the company receiving tax demands and penalty orders from authorities.

In August 2023, Zomato introduced a flat platform fee of Rs 2 to enhance its margins. Since then, the company has incrementally increased the fee by Rs 1. Interestingly, Zomato temporarily raised the platform fee to Rs 9 on New Year's Eve as a one-off hike.

Platform fee refers to the flat charge that food delivery companies charge from all customers across orders.  

In another development, Zomato has discontinued its intercity delivery service, Intercity Legends, which delivered limited quantities of famous dishes from renowned restaurants across select cities in India. This service included biryani from Lucknow and Hyderabad and sweets from Kolkata and Bengaluru.

Zomato transported these dishes by flight every day or two, depending on their perishability, keeping them frozen throughout the journey.

Upon selecting the 'Legends' section on Zomato's app, the following message appears: "Enhancements are underway. Please stay tuned as we will be back to serve you soon."

Meanwhile, Zomato has received a tax demand and penalty order amounting to Rs 11.82 crore related to GST on export services provided to its subsidiaries located outside India from July 2017 to March 2021.

Zomato is also facing another demand and penalty of over Rs 184 crore for non-payment of service tax from October 2014 to June 2017, related to sales by its foreign subsidiaries. Following this, Zomato said it would file an appeal against the order as it believes it has "a strong case on merits".

(The copy was updated with additional information.)