A Bengaluru-based startup has filed an appeal questioning a July 27 ruling by GST authorities in Karnataka which said app-based cab aggregators must pay GST on trip fares collected by private cab drivers/owners tied to their e-commerce platforms. 

Opta Cabs, a startup that plans to offer app-based cab hailing services, has preferred an appeal to the ruling by the GST Authority on Advance Ruling in Karnataka. Its founder Chandrakaladhar Reddy (44) said: “This kind of regulations impose huge legal costs, and create an entry barrier for startups like us. The policy needs to change.” 

Sections of GST experts believe the GST policy requiring aggregators to pay GST on fares collected by cab drivers will hurt startups as “it affects their liquidity and increases their operational risks and costs.” 

The provisions of law and notifications are detrimental to the interest of ecommerce players, especially startups, engaged in the business of providing taxi hire services through marketplace model, said M.A.Maniyar, GST consultant and former Deputy Commissioner of Commercial Taxes, Karnataka. A former tax commissioner, not willing to be identified, too felt the GST policy approach seemed to skew in favour of deep-pocketed aggregators, and not budding platforms. 

PV Srinivasan, mentor for indirect tax expert committee at Bangalore Chamber of Industries & Commerce (BCIC), felt the GST policy in this case militates against the government’s policy of encouraging self-employment. “The policy looks discriminatory against small entrepreneurs, and imposes a tax cost on ecommerce cab aggregators on a consideration that they don’t collect.” 

A Uber spokesperson, in an email to Economic Times, said: “Basis the legal requirements as stipulated and verified with the concerned authorities, Uber ensures GST compliant receipts are generated for every trip taken. Separately, as a company, Uber also makes the relevant GST payments and complies with the requirements and necessary disclosures.” 

 

 

 

Source: Economic Times

 

 

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