The Central Board of Indirect Taxes & Customs (CBIC) has given app-based ride-hailing companies one week to submit their written views regarding the applicability of GST on rides booked through their platforms. A high-level meeting, led by CBIC Chairman Sanjay Kumar Agarwal, took place in Delhi to discuss the varying business models used by companies like Uber, Rapido, and Namma Yatri, which could influence how GST is applied.
Uber India highlighted the lack of uniformity in tax applicability across different states, advocating for a standardized taxation model. They operate under an algorithm-based fare system, which adjusts pricing based on demand, similar to airline pricing. Rapido, operating under three different models, raised concerns about its inability to collect GST in cases where drivers handle fare collection directly. Meanwhile, Namma Yatri, hosted on the ONDC platform, argued that it should not be subject to GST under Section 9(5) of the CGST Act, as it only connects drivers with users without playing a role in fare collection or ride management.
This meeting follows a Karnataka High Court directive, which urged the CBIC to hear all stakeholders on the matter, with a decision due by November 12. The core issue revolves around the interpretation of Section 9(5) of the CGST Act, which governs GST on services provided "through" e-commerce operators. Tax experts noted that recent rulings from Karnataka's AAR have further complicated matters, leaving ride-hailing companies in need of clarity.
The outcome of these deliberations could significantly impact the business models of ride-hailing platforms and how consumers are charged GST for rides.
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