Flipkart Faces 18% GST On Delivery Charges After Relief Bid Fails
-
Startup Spotlight India
- May 14, 2026
Flipkart, owned by Walmart, has faced a setback after the West Bengal Appellate Authority for Advance Ruling (WBAAAR) reportedly rejected a proposed structure aimed at securing GST exemption on delivery charges collected from customers.
The decision could have broader implications for ecommerce and quick commerce companies that have been exploring similar frameworks to lower the tax burden on delivery fees, a major operational cost for such platforms.
As per an ET report, Flipkart had proposed a model under which it would classify itself as a Goods Transport Agency (GTA) for deliveries made from a “source mother hub” to customers’ homes.
Under this structure, the company intended to issue documents similar to consignment notes and separately bill customers for transportation services.
Flipkart argued that GTA services provided to unregistered individuals are exempt from GST under current regulations, and therefore the delivery fees collected under this arrangement should not attract GST.
In December 2025, the West Bengal Authority for Advance Ruling (WBAAR) had initially accepted the company’s argument and held that the proposed arrangement qualified as a GTA service. However, the state tax department later challenged the ruling before the appellate authority.
On May 6, the WBAAAR reversed the earlier decision, describing the proposed setup as a “mere legal fiction created through contractual structuring” rather than an actual GTA transaction.
The authority observed that customers use Flipkart’s platform primarily to purchase products with doorstep delivery and not to independently hire transportation services. It further noted that customers have no role in selecting transporters, deciding routes, or negotiating freight charges.
The appellate body also raised questions over whether last-mile deliveries carried out using two-wheelers and electric three-wheelers could qualify as transportation through a “goods carriage” under the Motor Vehicles Act, a necessary condition for GTA classification.
According to the order, Flipkart’s operations involve activities such as sorting, hub-based logistics, transshipment, tracking, and doorstep delivery, making them more comparable to organised courier and ecommerce logistics services than traditional GTA operations. Consequently, the authority ruled that these services would attract 18% GST.
The ruling comes amid increasing scrutiny over the GST treatment of delivery charges across ecommerce, food delivery, and quick commerce sectors.
Last year, the GST Council decided to levy 18% GST on delivery charges collected by platforms including Swiggy, Zomato, and Blinkit under Section 9(5) of the CGST Act. The move brought local delivery services offered through ecommerce operators directly into the GST framework and addressed what authorities viewed as a loophole in tax treatment.
Prior to the revised framework, delivery fees were largely treated as pass-through costs and remained outside the GST ambit. The updated rules increased delivery costs for consumers while also strengthening the legal basis for tax authorities in ongoing disputes over GST applicability on delivery charges.
Food delivery and quick commerce firms have already received multiple tax notices in recent years. In December 2024, Zomato received a GST demand notice of nearly ₹803 crore from Maharashtra authorities over delivery charges collected between October 2019 and March 2022.
Separately, the Directorate General of GST Intelligence (DGGI) issued a notice to Swiggy in September 2024 over alleged unpaid GST liabilities linked to delivery fees.
