Section 9(5) of the CGST Act, 2017

Section 9(5) of the Central Goods and Services Tax (CGST) Act, 2017 is a special rule for some services sold through online platforms. Normally, the person who supplies a service pays GST on it. But for certain services that the government notifies, Section 9(5) says the e-commerce operator (the online platform, such as a food-delivery app or a ride-hailing app) must pay the GST, as if the platform itself were the supplier.

So when you book a cab or order food through an app, the app, not the driver or the restaurant, pays the GST on that service.

Why does this rule exist?

Online platforms connect lakhs of small suppliers with customers. Many of these suppliers are tiny: a single cab driver, a small home-stay owner, a plumber, a small eatery. Most of them are below the GST registration limit, or find GST paperwork hard. If each one had to collect and pay GST, the government would struggle to track them and a lot of tax could be lost.

The platform, on the other hand, is one big, registered, computerised business that already records every order and every payment. So it is simpler and safer to make the platform pay. Think of a housing society that collects the water bill from all flats and pays the water board in one go, instead of the board chasing every family.

What does the law say?

Section 9 of the CGST Act is the "charging section": it says who pays GST and on what.

• Section 9(5) says the government may, on the recommendation of the GST Council, notify categories of services on which tax shall be paid by the e-commerce operator if such services are supplied through it. All the provisions of the Act then apply to the operator as if it were the supplier.
• If the operator has no physical presence in India, any person who represents it in India must pay the tax. If there is no such person, the operator must appoint one.
• The same rule exists in the other GST laws: Section 5(5) of the IGST Act (for supplies between states) and Section 7(5) of the UTGST Act (for Union Territories) [Unverified].
• Section 2(45) of the CGST Act defines an "electronic commerce operator" as any person who owns, operates or manages a digital or electronic facility or platform for electronic commerce.

Which services are covered?

The list has grown over time through notifications. As of October 2026, the main notified services are:

1. Passenger transport by radio-taxi, motorcab, maxicab, motorcycle or any other motor vehicle (except an omnibus, that is, a bus). This is the rule that applies to ride-hailing apps.
2. Accommodation in hotels, inns, guest houses, clubs, campsites and similar places, except where the person supplying it is himself liable to register.
3. Housekeeping services such as plumbing and carpentry, except where the person supplying it is himself liable to register.
4. Restaurant services supplied through an app, from 1 January 2022 (other than restaurants located in "specified premises", which are mainly hotels charging high room tariffs).
5. Local delivery services, from 22 September 2025, except where the person supplying the delivery service is himself liable to register.

Where did it come from?

The power was part of the CGST Act from the start of GST in 2017, and passenger transport by cabs was among the first services notified in June 2017. The big step came at the 45th GST Council meeting in Lucknow on 17 September 2021. It decided that food-delivery apps would pay 5% GST on restaurant food ordered through them, from 1 January 2022.

The reason given was that some restaurants selling through apps were not paying the tax they collected, and some were not registered at all. Making the app pay closed that gap. The customer did not pay any extra tax, because restaurant food was already taxed at 5%; only the person paying it changed. Then the 56th GST Council meeting (3 September 2025) brought local delivery services under Section 9(5) at 18%, for cases where the delivery partner is not liable to register, with effect from 22 September 2025.

How does it work, step by step?

Take a food order on an app.

1. You order a meal for ₹500 from a restaurant listed on the app.
2. The app collects ₹500 plus 5% GST (₹25) from you.
3. Under Section 9(5), the app, not the restaurant, pays the ₹25 to the government and shows it in its own return.
4. The restaurant does not charge GST again on this order.

The operator must pay this tax in cash (from its electronic cash ledger). It cannot pay it by using its own input tax credit, that is, the GST it paid on its own purchases. The operator must also take GST registration whatever its turnover (Section 24 of the Act). Meanwhile, a small supplier who sells only through such a platform can stay out of GST registration if its turnover is below the limit.

What does "5% without input tax credit" mean?

Many services, such as restaurant food and cab rides, are taxed at a low rate of 5% but with no input tax credit (ITC). ITC means a business can subtract the GST it paid on its own inputs (rent, raw material, fuel) from the GST it owes on its sales. "Without ITC" means the business pays the full 5% on its sales and cannot reduce it.

A low rate without ITC is simple: there is no need to track the GST paid on every purchase. A higher rate (like 18%) with ITC is fairer to businesses with large input costs. The Council chooses one model or the other for each service.

India's position and examples

Section 9(5) covers the business models most common in India's platform economy: ride-hailing apps for cabs and bike taxis, food-delivery apps and cloud kitchens, home-stay and hotel booking platforms, and home-services apps that send plumbers and electricians. Lakhs of gig workers (people who do short, task-based jobs through apps) work through these platforms. Section 9(5) means most of them do not need to deal with GST at all.

Commonly confused concepts

• Section 9(5) vs Section 52 (Tax Collected at Source, TCS): Under Section 9(5), the platform pays the whole tax as if it were the supplier, and the real supplier pays nothing on that sale. Under Section 52, the real seller (for example, a shop selling phones on a shopping website) remains the supplier and pays its own GST. The platform only holds back a small part of the payment as TCS and deposits it with the government. The TCS rate is 0.5% (0.25% CGST + 0.25% SGST, or 0.5% IGST) since 10 July 2024; it was 1% before. The seller can later adjust this TCS against its own tax.
• Section 9(5) vs Section 9(3)/9(4) (Reverse Charge): Under reverse charge, the buyer pays the tax instead of the seller (for example, a business that hires a goods transport agency). Under Section 9(5), a third party, the platform, pays. Both shift the duty to pay away from the supplier, but to different people. Section 9(5) is often loosely described as a special kind of reverse charge.
• E-commerce operator vs supplier: The operator runs the platform; the supplier gives the actual goods or service. Under Section 9(5), the law treats the operator as the supplier only for paying tax.

Issues, criticism and the way forward

• Burden on platforms: Platforms pay tax in cash on huge volumes of small orders and cannot use their own ITC for it. Industry groups say this ties up their working capital (the money a business needs to run day to day).
• Confusion over who pays: For accommodation, housekeeping and local delivery, the platform pays only when the supplier is not liable to register. This means the platform must know the GST status of each supplier, which creates disputes and extra checking work.
• Rates for delivery: Delivery charges have faced different rates and models (18% under Section 9(5) for unregistered delivery partners). Platforms and some experts have asked for a lower, single rate so that costs for customers and delivery workers stay low. Others warn that low rates without ITC can hurt businesses with high input costs.
• Way forward: Experts suggest clear rules on who pays in each case, faster clarifications from the GST Council, using the platforms' own data for automatic tax reporting, and keeping rates stable so that platforms do not need to change their billing systems often.

Concepts to Know

• E-commerce operator (ECO): A company that runs an online platform (website or app) through which other people sell goods or services, for example a ride-hailing, food-delivery or shopping app.
• CGST, SGST, IGST: The parts of GST. CGST goes to the Centre and SGST to the state when a sale happens within one state. IGST is charged on sales between two states and is later shared.
• Input tax credit (ITC): The GST a business already paid on its purchases, which it can subtract from the GST it owes on its sales.
• Electronic cash ledger: An online account on the GST portal where a taxpayer deposits money to pay tax in cash.
• GST registration limit: The yearly sales level above which a business must register under GST. Below it, small businesses can stay out of GST.
• Gig worker: A person who earns by doing short, separate tasks, often found through an app, such as a delivery rider or a cab driver.