Rethinking GST Impact on Ride-Hailing Services: A Call for Change

The Internet and Mobile Association of India (IAMAI) has called upon the government to reassess the imposition of Goods and Services Tax (GST) on rides booked through online platforms. In a recent letter to the Finance Ministry, IAMAI emphasized the detrimental effect of the 5% GST rate on driver income and service affordability.

IAMAI, representing major platforms like Rapido, Uber, and Ola, pointed out that the current GST structure not only affects private aggregators but also impacts government-supported digital mobility services such as Bharat Taxi. The association argues that this tax burden is passed on to drivers and consumers, countering efforts towards technology-led inclusion and affordable access to essential services.

Moreover, IAMAI noted the confusion caused by contradictory state rulings on GST applicability for software-as-a-service (SaaS) models. The organization seeks a dialogue with the GST Council and the Finance Ministry to propose exemptions for SaaS-based mobility services, aiming for a more sustainable economic model for the ride-hailing industry.