Adding to its growing list of tax troubles, Eternal — the parent company of Zomato and Blinkit — has been slapped with a ₹128.4 crore GST demand by the Uttar Pradesh State Tax Department. The order includes a tax demand of ₹64.2 crore and an equivalent penalty of ₹64.2 crore, covering the period between April 2023 and March 2024.
The notice, issued by the Deputy Commissioner of State Tax in Lucknow, alleges short payment of output tax and excess availment of input tax credit. Eternal disclosed the development in a regulatory filing on Sunday, stating that it intends to contest the order and will file an appeal before the appropriate authority. Eternal, however, maintained that it has a strong case on merits and expressed confidence in its position.
A Pattern of Tax Scrutiny Across States
This is not the first time Eternal has come under the tax radar. Over the past two years, the company has received multiple GST-related notices from authorities across India. These include a ₹401.7 crore demand from Maharashtra in late 2023, ₹2.2 crore from Delhi in May 2024, ₹4.6 crore from Tamil Nadu in August 2024, ₹17.7 crore from West Bengal in September 2024, ₹803.4 crore from Maharashtra again in December 2024, ₹1.3 crore from Uttar Pradesh in August 2025, and ₹40 crore from Karnataka in August 2025.
While such notices are not uncommon for large digital platforms handling high transaction volumes, the frequency and size of Eternal’s demands highlight the increasing scrutiny of tech-driven consumer companies under India’s GST regime.
Profit Under Pressure Despite Revenue Boom
The latest tax demand comes just after Eternal announced its Q2 FY26 financial results, which painted a mixed picture. The company’s consolidated net profit plunged 63% year-on-year to ₹65 crore, compared with ₹176 crore in the same quarter last year. However, its operating revenue surged 183%, reaching ₹13,590 crore, primarily powered by Blinkit’s breakout performance.
Blinkit’s revenue jumped nearly ninefold year-on-year to ₹9,891 crore, after the quick commerce platform transitioned to an inventory-led model. The move gave Eternal greater control over pricing, product assortment, and delivery reliability, but it also increased capital requirements for dark stores and logistics expansion.
Meanwhile, Zomato’s core food delivery segment has seen slower growth, weighed down by muted discretionary spending and the rising popularity of instant delivery services. Analysts believe that Eternal’s overall profitability could remain under pressure as Blinkit’s capital-heavy operations continue to scale.
The GST 2.0 Ripple Effect
Eternal’s management has also pointed to the challenges brought by GST 2.0, under which local delivery services attract an 18% GST when delivery partners are not GST-registered. The tax applies to delivery fees charged to customers, impacting around a quarter of Zomato’s orders.
In its latest shareholder communication, CFO Akshant Goyal noted that the company had decided to pass on the additional tax cost to customers, which led to a slight moderation in order volumes.
A Broader Business Rebuild Underway
Despite regulatory headwinds, Eternal has been reshaping its identity since rebranding from Zomato in March 2025. The company now operates across multiple verticals — food delivery, quick commerce, restaurant supplies (Hyperpure), and events and ticketing (acquired from Paytm) — positioning itself as a multi-ecosystem consumer tech platform.
While this diversification provides growth levers, it also adds operational complexity and compliance risks. The company’s aggressive scaling of Blinkit has been both a growth catalyst and a cost driver, making fiscal discipline crucial in the coming quarters.
The Road Ahead
As Eternal navigates this latest GST dispute, the case underscores a broader trend: India’s digital-first startups are entering an era of heightened tax vigilance. With multiple state authorities tightening enforcement and evolving regulations, such as GST 2.0, maintaining compliance while scaling rapidly has become a fine balancing act.
For now, Eternal remains confident in contesting the demand — but the road to sustainable, compliant growth may test even the most seasoned Indian unicorns.
