Zomato subsidiary gets RBI nod to operate as payment aggregator

Food delivery company Zomato on Thursday said its wholly-owned subsidiary Zomato Payments has received approval from the Reserve Bank of India (RBI) to operate as an online payment aggregator.

"Pursuant to our earlier disclosure dated August 4, 2021 regarding the incorporation of Zomato Payments Private Limited, a wholly owned subsidiary of Zomato Limited to carry out the business, inter alia, as payment aggregator and issuer of pre-paid payment instruments, we wish to inform that ZPPL has been granted certificate of authorization dated January 24, 2024, from the Reserve Bank of India to operate as an ‘Online Payment Aggregator’ in India with effect from January 24, 2024, as per the guidelines issued by the RBI," the food ordering firm says in a regulatory filing.

Shares of Zomato have gained 8% in 2024 and 188% over the past year. Its market cap stands at around ₹1.17 lakh crore.

Last month, Zomato received a show cause notice of ₹401.70 crore from the Directorate General of GST Intelligence, Pune. The food delivery company was asked why it should not be held accountable for an alleged tax liability of ₹401.70 crore, along with interest and penalties, covering the period from October 29, 2019, to March 31, 2022. "The amount alleged in the SCN is based on the amounts collected by the company as delivery charges from the customers on behalf of the delivery partners during the referred period. The company strongly believes that it is not liable to pay any tax since the delivery charge is collected by the company on behalf of the delivery partners," Zomato said in a stock exchange filing.

The food delivery firm said that in accordance with mutually agreed contractual terms and conditions, the delivery partners are the ones rendering delivery services to customers, not the company itself. This stance is backed by the opinions of external legal and tax advisors, it said, adding that it'll be filing an appropriate response.

"Disclosure is required to be made only of orders with penalties passed by authorities or pending litigation/dispute that has a material adverse impact on the company. At this stage, no order of any kind has been passed and as mentioned above, the company believes that it has a strong case on merit. Hence, this disclosure is being made voluntarily and as a matter of abundant caution given the large alleged tax demand in question," Zomato said.

In December 2023, fintech companies Razorpay and Cashfree Payments received payment aggregator licences from the Reserve Bank of India (RBI).