Updated on: Wednesday, December 08, 2021, 08:28 PM IST

Booking auto-rickshaw using online apps to become costlier from January 1 as govt plans to levy 5% GST

This comes at a time when people are already complaining about refusals by auto-rickshaws and cabs booked on Uber and Ola.
Photo: Representative Image

Photo: Representative Image


Booking a ride for auto rickshaw using Uber or Ola will become costlier from January 1. The government is planning to levy an additional 5 percent GST on bookings made using Apps for auto rickshaws. Aggregator cab operators are urging the government to reinstate this decision. They fear that it could lead to lesser demand from passengers for app-based auto rickshaws.

This comes at a time when people are already complaining about refusals by auto-rickshaws and cabs booked on Uber and Ola. Several times, when it comes to booking online auto-rickshaws, drivers keep rejecting the bookings or call up patrons who book using the aggregator App.

On December 8, Uber issued a statement saying that lakhs of auto drivers across India rely on Uber and other apps to earn a living. Riders, especially women and the elderly, like booking an Auto via an app because of the safety and convenience that comes with it, but they also value affordability.

"This tax will lead to a rise in platform fares and a corresponding drop in demand. Riders and drivers will both lose out in this scenario. Moreover, there are also questions over whether this tax will result in actual revenue gains for the government. ​​As demand shifts to street hail, the revenue from GST applied selectively to online bookings is likely to be marginal, at best," read Uber's statement.

The Government of India has announced it will levy a 5% GST on Auto rides booked online from 1 January next year, ending an existing exemption. Auto rides hailed on the street will continue to be GST-free.

The aggregators' claim that they understand the government need to collect revenues, yet they urge the government to reconsider this tax as it will hurt the earnings of auto drivers as well as the government’s digitization agenda.

However, this GST would not be implemented if someone hails an auto-rickshaw. This additional charge could lead to people moving to hail a cab as even 5% on the fare is a hike. The services provided by auto-rickshaw drivers in manual or offline mode will remain exempted.

The aggregators' claim that this modification will have a direct impact on e-commerce industry firms that supply a significant number of auto-rickshaw drivers with an online platform for connecting with riders. The tax will create an uneven playing field and it goes against the vision of digitization of services, products and payments.

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Published on: Wednesday, December 08, 2021, 08:28 PM IST