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Economic Times
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Ride-hailing firms to seek GST clarity from tax regulator
- Ride-hailing firms like Ola, Uber, and Rapido will engage with the tax regulator regarding GST applicability on services offered under the SaaS model.
- Under the SaaS model, platforms charge a fixed subscription fee to gig workers instead of a commission, raising concerns about inconsistencies in tax treatment.
- Karnataka Authority for Advance Ruling's decisions have caused ambiguity in tax treatment, affecting competitive parity in the sector.
- Rapido operates the subscription model for auto-rickshaw and four-wheeler ride-hailing, while Uber uses it for three-wheeler services. Ola Consumer recently expanded this model.
- Some companies have adopted a 'no-tax position' on the subscription model, leading to inequality for tax-paying players.
- Subscription-based plans help ride-hailing platforms potentially bypass the 5% GST applicable on rides by charging fixed fees to drivers.
- The 5% GST is mandated by the Central GST Act for ecommerce firms, including ride-hailing platforms, to collect and pay tax on behalf of service providers.
- Fresh representations to CBIC follow a Karnataka High Court order to seek clarity on the matter, amid disputes regarding GST liability for ride-hailing services.
- Tax experts warn of potential disputes between operators and tax authorities over the subscription model's GST implications.
- Inconsistencies in AAR rulings have led to varied GST liabilities for companies like Namma Yatri, Rapido, and Uber.
- Uber, Ola, and Rapido did not respond to queries regarding the recent developments.
- The representations aim to address the challenges arising from divergent rulings and lack of clarity in GST applicability for ride-hailing services.
- The engagement with the tax regulator comes in light of the need to ensure a level playing field and compliance in the ride-hailing sector.
- The sector is price-sensitive, and discrepancies in tax treatment of subscription-based models can impact competitiveness among players.
- The continuing discussions reflect the ongoing efforts to resolve the GST implications for ride-hailing platforms and maintain regulatory alignment.
- Given the complexities and implications of the GST matter, the sector anticipates further guidance and clarification from the tax authorities.
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