Swiggy Instamart Quick Commerce Settlement: Section 194O TDS, Section 9(5) CGST and Restaurant Partner Reconciliation India

A multi-outlet quick-service restaurant chain running 32 outlets across Bengaluru, Chennai and Hyderabad closes the July settlement cycle and pulls the Swiggy payout register: 41,720 orders facilitated in the month, aggregate gross order value ₹2.87 crore, aggregate net cash remitted ₹1.94 crore, and a residual gap of ₹4.6 lakh between what the finance team’s spreadsheet expected and what the bank statement received. The finance controller’s forensic question is precise — where did the ₹4.6 lakh go, and what portion of it is a legitimate deduction versus an unclaimed tax credit versus commission drift versus rolling-reserve timing. The answer requires decomposing every one of the 41,720 orders across a nine-step deduction stack — commission at the contracted rate, GST at 18% on the commission, per-order packaging fees, discount co-funding, Section 194O income-tax TDS at 0.1% on the gross, Section 52 CGST TCS at 0.5% on the taxable value where it applies, and the 3% to 5% rolling reserve held for 7 to 14 days. Swiggy Instamart quick commerce settlement TDS 194O India reconciliation, overlaid on the Section 9(5) CGST operator-liability fiction for restaurant supplies, is the most under-controlled surface in Indian restaurant-and-quick-commerce finance operations, and the fastest place to lose real cash without the P&L ever surfacing it.

The reconciliation in one paragraph

Every Swiggy order flowing to a restaurant partner or an Instamart merchant is a two-plane transaction — the customer-visible plane (menu price plus GST, delivery fee, tip) and the merchant-facing plane (net remittance after commission, GST on commission, packaging fee, promotion co-funding, Section 194O TDS, Section 52 TCS, rolling-reserve movement). The tax overlay depends on whether the supply is a restaurant service covered by Section 9(5) CGST — where Notification 17/2021-Central Tax (Rate) effective 1 January 2022 makes Swiggy the deemed supplier and payer of the 5% GST, and the restaurant partner cannot avail ITC on inputs attributable to those supplies under Rule 42 — or a Section 9(5)-excluded supply such as an Instamart grocery item or a merchant-goods sale where the restaurant / merchant remains the supplier, pays HSN-rate GST and recovers ITC normally. Reconciliation must maintain per-order granularity, per-supply-type segregation, per-outlet roll-up, and per-statute credit-claim tracking (Form 26AS for 194O, GSTR-2B for 52) — collapsing any layer breaks the audit trail.

Quick reference

What the Swiggy settlement actually looks like in India — safe illustrative operator persona

Swiggy Limited operates two distinct merchant-facing flows through a single corporate entity, both settling to merchant partners under the same Swiggy Restaurant Partner / Swiggy Instamart Merchant onboarding stack. The restaurant-partner flow covers full-service restaurants, quick-service restaurants, cloud kitchens, cafes and dessert brands — Domino’s franchisees, McDonald’s franchisees, Rebel Foods brands (Faasos, Behrouz, Ovenstory), Devyani International outlets (KFC, Pizza Hut, Costa Coffee), Sapphire Foods outlets, Speciality Restaurants (Mainland China, Oh! Calcutta), Barbeque Nation, Blue Tokai Coffee Roasters, Third Wave Coffee, along with lakhs of independent restaurants across 700-plus Indian cities. The Instamart flow covers 10-minute grocery delivery through dark stores — the store is operated either by Swiggy itself (as a first-party merchant) or by a partner brand (an FMCG D2C brand, a private-label operator, or a category-specialist merchant like a bakery or florist supplying through the Instamart marketplace).

For the restaurant partner, the customer places an order on the Swiggy app, pays the menu price plus 5% GST (which Swiggy itself pays to the government under Section 9(5) CGST per Notification 17/2021-CTR — not the restaurant), plus a delivery fee (paid to Swiggy) plus a tip (passed through to the delivery partner). The restaurant fulfills the order at its kitchen, and Swiggy’s delivery partner picks up and delivers within a typical 25 to 45 minute window. For an Instamart order, the customer places an order for grocery items, pays the item price plus HSN-appropriate GST (which the merchant partner pays, or Swiggy pays if it is the first-party merchant), plus a delivery fee, and the item is picked from the nearest dark store and delivered within a 10 to 20 minute window.

At the end of every daily or weekly cycle (typically T+1 for restaurant partners and T+2 or T+7 for Instamart merchants depending on the contract), Swiggy remits the net cash after the deduction stack — commission, GST on commission, packaging fee, delivery adjustment, promotion co-funding, Section 194O TDS, Section 52 TCS where applicable, rolling-reserve movement. The remittance lands in the merchant’s bank account with a UTR and a settlement-cycle reference, and a corresponding settlement statement is downloadable from the Swiggy restaurant-partner portal or the Instamart merchant portal in CSV / Excel format.

The regulatory overlay — three statutes, one settlement line

Section 9(5), CGST Act 2017 read with Notification 17/2017-Central Tax (Rate) as amended by Notification 17/2021-Central Tax (Rate). For restaurant services (other than restaurants located at specified premises such as five-star hotels with declared tariff above ₹7,500 per unit per day) supplied through an electronic commerce operator, the e-commerce operator is deemed to be the supplier and pays 5% GST on the value of the supply. The notification came into force on 1 January 2022. The restaurant partner does not charge GST on those supplies, does not include those supplies in its own GSTR-1 (they are reported by Swiggy in GSTR-3B Table 3.1.1), and cannot claim ITC on inputs attributable to those supplies. CBIC Circular 167/23/2021-GST dated 17 December 2021 clarified the operational aspects — ITC reversal under Rule 42 for common inputs, no separate registration required for restaurants supplying only through Section 9(5) operators, invoicing through the operator.

Section 52, CGST Act 2017 read with Notification 15/2024-Central Tax dated 10 July 2024. Every electronic commerce operator (not being an agent) must collect TCS at the notified rate on the net value of taxable supplies made through it by other suppliers where the consideration is collected by the operator. The rate was originally 1% (0.5% CGST + 0.5% SGST or 1% IGST) and was reduced to 0.5% (0.25% + 0.25% or 0.5% IGST) with effect from 10 July 2024. Critically, TCS applies only to supplies where the operator is not itself the deemed supplier under Section 9(5) — so for a pure restaurant partner supplying only through Swiggy on Section 9(5)-covered restaurant service, TCS does not apply to those supplies. For an Instamart merchant selling grocery goods, TCS at 0.5% applies to the taxable value. For a hybrid partner (a restaurant that also sells packaged desserts as merchant goods through the same platform), the split matters. Swiggy files Form GSTR-8 monthly by the 10th of the following month; the TCS credit auto-populates into the merchant’s GSTR-2A / GSTR-2B and is claimable in GSTR-3B Table 6.1.

Section 194O, Income-tax Act 1961 (mapped to Section 393(1) Sl. 25 in the Income-tax Act 2025 taxonomy). The e-commerce operator must deduct TDS on the gross amount of sales of goods or services facilitated through its platform to the e-commerce participant. The rate was 1% at introduction (Finance Act 2020, effective 1 October 2020) and was reduced to 0.1% by the Finance (No. 2) Act 2024 with effect from 1 October 2024. The gross amount is the pre-commission, pre-packaging-fee, pre-discount order value visible to the end customer. For an individual or HUF participant with PAN, no TDS on aggregate annual sales up to ₹5 lakh per FY; for a company, LLP or firm, TDS from the first rupee. Swiggy files Form 26Q quarterly, deposits the TDS by the 7th of the following month (30 April for March), and the deducted amount populates into the restaurant’s Form 26AS and AIS. For the interaction between Section 194O and Section 194Q, and the operator-vs-participant classification test, see the Section 194O e-commerce reconciliation guide and the Section 194O rate history.

Rule 42, CGST Rules 2017. Where a registered person makes both taxable outward supplies and exempt / non-taxable outward supplies (and Section 9(5) supplies from the restaurant partner’s side are effectively non-taxable outward supplies since the tax liability shifts to the operator), the ITC on common inputs must be apportioned in the ratio of exempt / non-taxable supplies to total supplies, and the exempt-supply portion of common-input ITC must be reversed. For a restaurant with 100% Section 9(5) supplies through Swiggy and no dine-in / own-website, all ITC on rent, gas, electricity, packaging and common inputs is reversed. For a hybrid restaurant with 60% Swiggy 9(5) supplies and 40% dine-in, 60% of the common-input ITC is reversed. CBIC Circular 167/23/2021-GST spells out the mechanics.

For the broader taxonomy of when a platform is a Section 9(5) operator versus a Section 52 operator versus both, see the marketplace Section 9(5) GST guide.

A worked example — illustrative Swiggy restaurant-partner monthly settlement

Consider an illustrative single-outlet cloud-kitchen brand supplying only through Swiggy on Section 9(5)-covered restaurant service, with the following July 2026 activity:

Illustrative — the numbers below are representative of the operating pattern, not actual customer data. Cross-verify against the current Swiggy contract rate card and the outlet’s own GSTR filings before action.

Gross order flow:

• Orders facilitated: 3,120
• Aggregate gross order value (menu price × quantity, pre-tax visible to customer): ₹4,50,000
• Average order value: ₹144
• 5% GST paid by Swiggy under Section 9(5) on ₹4,50,000: ₹22,500 (Swiggy’s liability, not the restaurant’s — informational only)

Swiggy deduction stack (merchant-facing):

• Commission at contracted rate of 20% on ₹4,50,000: ₹90,000
• GST at 18% on the commission of ₹90,000 (Swiggy’s intermediary supply to the restaurant): ₹16,200
• Packaging fees at ₹10 average per order × 3,120 orders: ₹31,200 (rounded to ₹32,000 in the illustrative pack — includes small delivery adjustments)
• Promotion co-funding (restaurant’s share of Swiggy One / discount campaigns): ₹0 (not enrolled in this illustration)
• Section 194O TDS at 0.1% on the gross of ₹4,50,000 (current rate, post 1 October 2024): ₹450
• Section 52 CGST TCS at 0.5% on non-9(5) taxable value: ₹0 (all supplies are Section 9(5) restaurant service; no TCS applies to the restaurant leg)
• Rolling reserve at 3% of gross held for 10 days: ₹13,500 accrued (released back in a future cycle)

Net cash remitted for the month (settlement bank credit):

• ₹4,50,000 gross
• Less commission ₹90,000
• Less GST on commission ₹16,200
• Less packaging + adjustments ₹32,000
• Less Section 194O TDS ₹450
• Less rolling-reserve accrual ₹13,500
• Net remitted: ₹2,97,850 (before the reserve release of a prior cycle)

Tax credit position:

• Section 194O TDS of ₹450 populates into Form 26AS / AIS against the restaurant’s PAN, claimable in the ITR as income-tax credit.
• Section 52 CGST TCS is nil for the restaurant leg (all Section 9(5) supplies). If the restaurant also sold packaged desserts as an Instamart merchant, the TCS at 0.5% would apply to that separate flow.
• GST of ₹16,200 on the Swiggy commission is an ITC on intermediary services. For a 100% Section 9(5) restaurant partner, this ITC is fully reversed under Rule 42 because the commission is an input attributable to Section 9(5) supplies. Net cost of commission to the restaurant = ₹90,000 + ₹16,200 = ₹1,06,200 (no ITC recovery on this leg). For a 60/40 Swiggy/dine-in restaurant, 40% of the ₹16,200 = ₹6,480 is claimable as ITC.
• Swiggy’s own 5% GST payment of ₹22,500 on the restaurant supply is a Swiggy liability, not the restaurant’s — it does not show up in the restaurant’s electronic cash ledger or the restaurant’s GSTR-3B.

Illustrative Instamart merchant leg — same operating month, hypothetical dessert boxes sold through Instamart:

• Instamart gross ₹1,80,000
• Commission at 22% + platform fee: ₹41,000 (illustrative)
• GST at 18% on commission: ₹7,380
• Section 194O TDS at 0.1%: ₹180
• Section 52 CGST TCS at 0.5% on taxable value of ₹1,80,000: ₹900 (applies here because Instamart is not Section 9(5) covered; the merchant is the supplier)
• The ₹900 TCS credit appears in the merchant’s GSTR-2B (auto-populated from Swiggy’s GSTR-8) and is claimable in GSTR-3B Table 6.1.
• ITC on the ₹7,380 commission GST is fully claimable — no Rule 42 reversal because Instamart merchant supplies are taxable outward supplies, not 9(5) supplies.

Critical audit points:

1. The restaurant leg 5% GST of ₹22,500 does NOT appear in the restaurant’s GSTR-3B output tax — it is Swiggy’s liability under Section 9(5). Restaurants that erroneously include it in their own GSTR-1 double-tax the supply. See the Section 9(5) cloud-kitchen bridge for the GSTR-1 disclosure discipline.
2. The Rule 42 ITC reversal on common inputs attributable to Section 9(5) supplies is often missed by restaurants that assume “we paid GST on rent so we can claim it fully.” Only the non-Section-9(5) portion is claimable.
3. Section 194O TDS credit of ₹450 (restaurant leg) + ₹180 (Instamart leg) = ₹630 for the month is small in absolute terms but compounds annually; unclaimed 194O credit is a common cash-flow leakage source.
4. Section 52 CGST TCS applies only to the Instamart leg (₹900), not the restaurant leg. Merchant-and-restaurant hybrid partners must maintain the supply-type split.
5. The rolling-reserve accrual of ₹13,500 is not a permanent deduction — it releases back in a future cycle. Reconciliation must track the reserve build-up and release timeline; unreleased reserve at year-end is a receivable on the balance sheet.
6. For hybrid multi-outlet chains, the reconciliation must roll up per outlet and per supply type. A single 32-outlet chain running the same GSTIN across outlets sees Section 52 TCS auto-populate at the GSTIN level in GSTR-2B — allocation back to outlets is an internal reporting question, not a compliance question.

Common reconciliation breakages

Commission drift undetected at scale. The contracted commission rate is 20% but the deducted commission across 3,120 orders averages 20.4% because a subset of orders are re-categorised into a higher-commission cuisine bucket without notification. The 0.4 percentage-point drift on ₹4,50,000 is ₹1,800 for the month — ₹21,600 for the year — invisible in a spreadsheet reconciliation that ties only to aggregate settlement. The Zomato settlement comparison guide documents the identical pattern on the Zomato side.

Section 9(5) supply included in restaurant’s own GSTR-1. The restaurant’s accountant, unaware that Section 9(5) shifted the tax liability to Swiggy from 1 January 2022, continues to report the Swiggy restaurant sales in the restaurant’s GSTR-1 and charges 5% GST in the restaurant’s GSTR-3B. Swiggy has also reported the same supply in its GSTR-3B Table 3.1.1 under its own liability. The GST department eventually surfaces the duplicate — either as excess GST paid by the restaurant (refund route) or as an unclaimed credit — but the reconciliation cost is high and the working-capital drag is real.

Rule 42 ITC reversal not run. The restaurant claims full ITC on rent, gas, packaging and utility inputs used across dine-in and Swiggy-Section-9(5) supplies. On audit, the officer demands Rule 42 reversal — typically ₹40,000 to ₹1,50,000 per month depending on outlet size and the Section 9(5) share of total supplies — plus Section 50 interest at 18% per annum and Section 73 or 74 penalty. See the Section 9(5) aggregator restaurant liability guide for the exact reversal mechanic.

Section 194O TDS credit unclaimed in ITR. The Form 26AS shows Section 194O credits deposited by Swiggy but the restaurant’s income-tax return does not include the claim. For a small restaurant partner with ₹40 lakh annual Swiggy gross, the 0.1% Section 194O deduction is ₹4,000 — unclaimed for three years running is ₹12,000 permanently lost after the amendment window closes.

Section 52 TCS credit unclaimed in GSTR-3B. The GSTR-2B auto-populates the TCS credit from Swiggy’s GSTR-8 filing but the restaurant’s GSTR-3B does not claim it in Table 6.1. The credit sits in the electronic cash ledger unused. Instamart merchant partners are particularly affected because the TCS deduction is more visible on that leg (grocery is not Section 9(5) covered) but the claim mechanism is often skipped.

Rolling-reserve release delay unrecovered. Swiggy holds a 3% to 5% rolling reserve for 7 to 14 days per its terms; occasional delays extend to 30 to 60 days for chargeback-heavy outlets. The reserve is a receivable on the restaurant’s books, not a permanent cost, but is often written off to expense by accountants unfamiliar with the mechanism. Reconciliation must track reserve accrual and release per settlement cycle with an ageing report.

Packaging fee arithmetic drift. The contracted packaging fee is ₹8 per order but the deducted average across the month is ₹10.2 — a 27.5% drift. Over 3,120 orders that is ₹6,864 for the month, ₹82,368 annualised, invisible without per-order decomposition. The platform settlement decomposition — Google Sheets template shows the exact spreadsheet layout for catching this.

Instamart vs restaurant supply-type misclassification. A restaurant that also sells packaged goods through Instamart aggregates both flows into a single Swiggy payout account. When the GST auditor asks for the Section 9(5) segregation, the reconciliation team cannot separate the two legs from a single Tally account and has to rebuild classification from the order-level settlement CSV — a multi-week effort that typically finds material Rule 42 reversal gaps. See the quick commerce Blinkit, Zepto, Instamart reconciliation guide for the multi-platform supply-type framework.

How a reconciliation platform handles this

Running per-order settlement decomposition across a nine-step deduction stack, segregating Section 9(5) restaurant supplies from Section 9(5)-excluded Instamart merchant supplies, cross-referencing every order to a contracted rate card to catch commission drift, tying Section 194O TDS deductions to Form 26AS accretion monthly, tying Section 52 CGST TCS deductions to Swiggy’s GSTR-8 filing and the auto-populated GSTR-2B, and tracking the rolling-reserve accrual and release per settlement cycle is a multi-source reconciliation problem across the Swiggy portal, the bank statement, GSTR-2B, Form 26AS and the outlet-level POS. A purpose-built reconciliation software India treats each Swiggy settlement cycle as an event to be decomposed at the per-order level, applies the supply-type classification at ingestion, generates the exception register for commission drift, unclaimed TDS / TCS credits, delayed reserve release and Rule 42 reversal gaps, and produces the audit-ready evidence pack that ties the bank credit line back through Swiggy’s settlement report to the underlying order set. Customer outcomes across multi-outlet restaurant-and-quick-commerce chains include settlement match-rate improvement from 51% to 88%, with the platform configured against the outlet’s own Swiggy rate card, tax profile and GSTR reporting cadence in two to four weeks on AWS Mumbai (ISO 27001:2022, DPDP Act 2023 aligned). For the broader GST reconciliation surface across GSTR-1, GSTR-2B, GSTR-3B and Rule 42 reversal, see the GST reconciliation software India money page; for the income-tax TDS reconciliation surface across Section 194O, 194C, 194Q and Form 26AS, see the TDS reconciliation software India money page; and for the platform-settlement reconciliation surface across Swiggy, Zomato, Blinkit, Zepto and Instamart, see the payment gateway reconciliation money page.

Continue reading — Retail / D2C and platform-settlement cluster

• Swiggy restaurant settlement reconciliation — the restaurant-partner-only variant with detailed commission and packaging arithmetic
• Zomato restaurant settlement reconciliation — the Zomato-side variant with equivalent deduction stack under the same Section 9(5) / 194O / 52 framework
• Quick commerce Blinkit, Zepto, Instamart reconciliation — three-platform quick-commerce merchant reconciliation
• Marketplace Section 9(5) GST — D2C India — the operator-liability taxonomy across food delivery, quick commerce, ride-hail and accommodation
• Section 9(5) CGST cloud-kitchen and FMCG bridge — the GSTR-1 disclosure discipline for restaurant partners
• Section 194O e-commerce reconciliation — the income-tax TDS mechanics for e-commerce participants
• Section 52 CGST TCS for quick commerce — the TCS mechanics for non-Section-9(5) supplies
• Platform settlement decomposition — Google Sheets template — the spreadsheet layout for per-order decomposition

Terra Insight Editorial Team Reconciliation Infrastructure

Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →

Published 9 September 2026

Domain expertise

TDS Reconciliation GST Input Credit Platform Settlements NACH Batch Matching Bank Reconciliation Form 26AS Matching ERP Integrations Enterprise Finance Ops

Reviewed by

NK

Navin Krishnan

Managing Director & Founder — Terra Insight

Ex Amazon India · Intuit QuickBooks · Tata nexarc

ISO 27001:2022 Patent Pending Incorporated 2024