Whereas native supply companies by e-commerce operators (ECOs) will now be chargeable for GST, trip apps are nonetheless awaiting readability on whether or not GST applies to passengers below the subscription mannequin — the place drivers pay 18 per cent on month-to-month platform charges.
At its 56th assembly final week, the GST Council really useful an 18 per cent levy on native supply companies by ECOs — like Zomato and Swiggy — along with the 5 per cent already collected by such aggregators on behalf of eating places. The extra price is predicted to be handed on to customers of meals aggregator apps.
In distinction, ride-hailing apps comparable to Uber, Rapido, and Ola proceed to hunt readability on whether or not GST applies to passengers below the subscription mannequin, the place drivers already pay 18 per cent on month-to-month platform charges.
Zomato and Swiggy have been held chargeable for 18 per cent GST on supply companies, although they contend that, contractually, the service is offered by supply companions to clients and never by the platforms themselves. Equally, in ride-hailing, platforms preserve that drivers are unbiased, with apps merely connecting them to passengers.
The position of ride-hailing apps as facilitators has gained significance with the unfold of the subscription mannequin, the place the 5 per cent GST is not levied on rides — in contrast to within the commission-based mannequin, the place it continues to use. Below the subscription mannequin, passengers choose ‘money’ as their fee methodology and settle fares immediately with drivers, both in money or through UPI, whereas drivers pay apps a periodic price for platform entry.
Nonetheless, authorized ambiguity persists over whether or not the 5 per cent GST ought to apply even below this mannequin, since apps are arguably nonetheless offering a service to passengers.
The Karnataka bench of the Authority for Superior Ruling (AAR) had dominated in November 2024 that Uber stays liable to gather and pay 5 per cent GST below the subscription mannequin, even when it’s not amassing any fee from passengers.
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In distinction, an earlier September 2023 ruling by the identical bench on an utility by Namma Yatri acknowledged it was not required to gather GST from passengers, on grounds that it solely hyperlinks drivers to passengers with out being immediately concerned within the transport service.
In February this 12 months, Uber switched to a subscription mannequin for auto rickshaw rides, following rivals Namma Yatri, Rapido, and Ola. Not like commissions that take as much as 30 per cent of drivers’ each day earnings, the subscription mannequin prices fastened charges with no commissions, aimed toward drawing extra drivers onto platforms. For passengers, this usually means cheaper fares, as no 5 per cent GST is levied on them.
The shift gained traction after Namma Yatri, developed by Juspay Applied sciences with Bengaluru’s Auto Rickshaw Drivers’ Union (ARDU), launched it for autos in September 2023 and expanded to cabs in April 2024.
Rapido launched subscription plans for cab drivers in December 2023 and for autos in February 2024. Ola adopted in April 2024 with plans for autos throughout Delhi-NCR, Mumbai, Bengaluru, and Hyderabad, and prolonged them to cabs in June.
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Uber, which has a firmer footing within the four-wheeler area, has but to undertake the subscription mannequin for cabs, however that might change quickly within the absence of any official clarification on GST legal responsibility and on account of intensifying competitors.