Unbundling Food Delivery: How Rapido’s Ownly Disrupts the Market and Redefines GST Dynamics

Ordering food online in India has long carried a silent premium. A meal that costs ₹100 at a local diner frequently balloons to ₹250 or ₹300 by the time it reaches a customer’s doorstep. According to Rapido co-founder and CEO Aravind Sanka, this massive pricing discrepancy is the primary bottleneck preventing India’s online food delivery market from expanding to its true potential. To bridge this gap, Rapido has launched “Ownly,” a zero-commission food delivery platform designed to bring restaurant menu prices back to their offline realities.

Ownly, which debuted in Bengaluru in March and recently expanded to Hyderabad, operates on a simple premise: eliminate the steep 20% to 30% commissions traditionally charged to restaurants, charge customers separately for delivery, and leverage Rapido’s existing “Captain” logistics network to keep operational costs low. While this strategy promises to disrupt the duopoly of Zomato and Swiggy, it also introduces a fascinating shift in the fiscal, tax, and compliance landscape for the food-tech sector.

The Mechanics of Zero-Commission Food Delivery

Under the conventional food delivery model, aggregators charge restaurants high commissions to cover logistics, marketing, and platform maintenance. To preserve their margins, restaurants inflate their online menu prices. Sanka points out that while a customer might be willing to pay ₹65 for a ₹20 plate of idli (including a reasonable delivery fee), they will reject a final checkout price of ₹120 driven by artificial markups.

By offering a zero-commission alternative, Ownly allows restaurants to list their items at actual dine-in rates. This model shifts the monetization focus entirely to the delivery fee. Ownly has already gained significant traction in Bengaluru, onboarding over 25,000 restaurant partners and clocking nearly 50,000 daily orders. With plans to expand to all major metro areas starting in the October quarter, this unbundled pricing strategy is poised to reshape how transactions are structured, reported, and taxed.

The GST Implications of an Unbundled, Zero-Commission Model

While the consumer benefits from lower menu prices, the transition from a bundled commission model to an unbundled, delivery-only fee model fundamentally alters the Goods and Services Tax (GST) dynamics for all parties involved. In India, food delivery platforms are classified as E-commerce Operators (ECOs) and are governed by strict tax mandates.

1. Section 9(5) of the CGST Act and the Tax Burden Shift

Under Section 9(5) of the Central Goods and Services Tax (GST) Act, the responsibility to pay GST on restaurant services supplied through an ECO lies entirely on the platform itself, rather than the individual restaurant. Whether the restaurant is registered or unregistered, the platform must collect and deposit the 5% GST (without Input Tax Credit) on the food bill.

Under Ownly’s model, because the menu prices are kept at offline levels, the absolute value of the food bill decreases. Consequently, the quantum of GST collected per order under Section 9(5) will also shrink. However, Rapido bets that the volume of orders will scale exponentially as the market expands to an estimated 100 million users over the next three years, ultimately offsetting lower per-order tax collections with massive aggregate volumes.

2. Eliminating the 18% GST on Platform Commissions

In traditional setups, aggregators invoice restaurants for platform commissions, which attract a standard service GST rate of 18%. Because most small and medium-sized restaurants operate under the flat 5% GST scheme, they are restricted from claiming Input Tax Credit (ITC) on their business expenses. This means the 18% GST charged on commissions becomes a dead cost, further driving up food prices.

By eliminating the platform commission entirely, Ownly removes this tax-cascading effect. Restaurants no longer receive high-value commission invoices carrying non-refundable GST. This dramatically improves cash flows for small Food Business Operators (FBOs). Understanding these shifts is crucial for businesses navigating complex ITC scrutiny and compliance dynamics across service-oriented sectors.

3. The Tax Treatment of Unbundled Delivery Charges

When delivery fees are unbundled and charged directly to the customer, the tax classification of the delivery service comes under scrutiny. Under GST laws, delivery services provided by an ECO are taxed at 18% as a standalone service, whereas food delivery under Section 9(5) is taxed at 5%.

If Ownly bills the delivery charge as a distinct transaction separate from the food order, it must ensure meticulous compliance to prevent disputes over “composite supply” classification. If tax authorities view the transaction as a single composite supply of food where delivery is ancillary, the entire bundle could be taxed at 5%. However, if treated as independent supplies, the platform must carefully segregate the invoicing to apply 5% GST on the food portion and 18% on the delivery service portion, requiring highly robust automated tax engines.

Formalizing the Unorganized Food Sector

One of the broader economic impacts of Rapido’s expansion strategy is the formalization of local, unorganized eateries. By lowering the entry barrier with zero commissions, micro-restaurants that previously stayed offline due to prohibitive costs are now entering the digital ecosystem.

This transition has direct fiscal benefits. When small-scale eateries join organized digital platforms, their transactions are recorded, leading to greater transparency. This digital footprint aids the government in expanding the tax net, curbing cash-based tax evasion, and mitigating the fiscal leakages often associated with informal economies. Similar dynamics of formalization can be seen in other sectors aimed at reducing formalizing the unorganized market and tax losses.

Compliance Challenges in Multi-Metro Scaling

As Ownly prepares to scale to all metropolitan cities starting in the October quarter, compliance management will become increasingly complex. Operating across multiple states requires navigating varying state-level GST (SGST) distributions, managing Tax Collected at Source (TCS) provisions under Section 52 of the CGST Act, and ensuring that thousands of gig-worker “Captains” are correctly classified and accounted for in the corporate tax books.

Furthermore, any operational friction or tax misclassification at scale could invite regulatory scrutiny. Platforms must maintain real-time auditing systems to track split payments, where the food cost goes to the restaurant, the delivery fee goes to the logistics arm, and the respective GST portions are routed to the government treasury without error.

Conclusion

Rapido’s Ownly is not just testing a new business model; it is testing the elasticity of India’s food-tech regulatory framework. By unbundling the cost of food from the cost of logistics, Ownly offers a compelling blueprint to democratize online food ordering. However, the success of this high-volume, low-margin play will ultimately depend on how seamlessly the platform manages the intricate web of GST compliance, composite supply classifications, and multi-state tax distributions as it scales nationwide.

Frequently Asked Questions