Summary
The ride-hailing industry is currently facing pressing challenges stemming from recent goods and services tax (GST) rulings, which have contributed to uncertainty regarding funding and innovation. In an official statement responding to inquiries from the Economic Times, Uber highlighted the adverse impact of these conflicting advance rulings. The company has petitioned the Authority for Advance Rulings in Karnataka (AAR-KA) for clarification on these issues. Furthermore, Uber has reached out to the Union finance ministry and state GST authorities to discuss the discrepancies in tax obligations. A pervasive sense of confusion exists across various jurisdictions, as articulated by a confidential industry executive. The turmoil was exacerbated by the recent ruling from AAR-KA, which mandated that Rapido must pay GST on services rendered by taxi drivers utilizing its application. This decision starkly contrasts a prior ruling that exempted firms such as Multi-Verse and Juspay Technologies from GST liabilities regarding similar services. According to Sadashiv Prasad, a practicing chartered accountant advising aggregators, the previous decision provided significant benefits to both drivers and passengers by limiting the GST liabilities to merely the platform subscription fees paid by drivers. He expressed concern that the new ruling complicates tax collection processes and risks diminishing drivers’ additional earnings, while simultaneously instigating fears among passengers about a potential increase in fare rates. Rapido has yet to respond publicly to inquiries regarding this matter. HD Arun Kumar, a former senior tax administrator in Karnataka, criticized the AAR-KA’s conflicting opinions in the cases of Namma Yatri and Rapido, suggesting that the rulings stemmed from misunderstandings regarding the operational mechanics of these applications. He argued that in both instances, the operators should not incur GST liabilities. Shan MS, the Chief Operating Officer of Namma Yatri, voiced support for the favorable ruling received by his company, emphasizing that their model does not involve fare collection or price setting, thereby ensuring fair pricing for passengers and fair compensation for drivers. According to Shan, their commitment to the government-supported ONDC Network aims to democratize commerce and enhance earnings for marginalized drivers. Abhysyant Anasapurapu, co-founder of Multi-Verse Technologies, discussed the inception of their MYn application as a means to alleviate issues faced by both drivers and passengers while respecting the autonomy of taxi drivers in setting fares and managing rides. He expressed satisfaction with the favorable AAR ruling for his company, noting its positive implications for both drivers and customers in avoiding excessive fare hikes during peak hours and exploitative practices. In conclusion, the disparate GST rulings present a significant hurdle for ride-hailing services, generating confusion and anxiety within the industry. While some aggregators have benefited from favorable decisions that could enhance operational integrity and consumer trust, the overarching uncertainty continues to impinge upon innovation and funding in this critical sector.
Original Source: m.economictimes.com
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