Auto rickshaw rides booked through Ola, Uber and similar app aggregators are set to get more expensive from January 1, 2022, with the Union government deciding to impose 5% GST on these rides booked online.
The development comes just days after the Bengaluru transport authority hiked auto fares in the city by 15 to 20 per cent. Auto-rickshaws functioning outside of the hailing apps will not come under the GST ambit.
Demanding a reconsideration of the move, an Uber spokesperson told The Times of India that while they appreciate the need for the government to collect revenues, they have urged it to reconsider this tax, which will end up affecting the earnings of auto drivers as well as the government’s digitisation agenda.
“Lakhs of auto drivers across India rely on Uber and other apps to earn a living,” an Uber spokesperson said, pointing out that women and elderly riders prefer booking a ride on the app for safety and convenience. “But they also value affordability. This tax will lead to a rise in platform fares and corresponding drop in demand,” the spokesperson added.
“We urge the government to reinstate the GST exemption for online auto products in the ride-sharing industry to ensure riders, drivers and cities can keep benefiting from the growth in this sector,” he added.
Peace Auto, an association of auto-rickshaws drivers, said 50 per cent of drivers get their daily rides through Ola and Uber.
“Earnings plummeted due to Covid-19 and now the government wants 5 per cent cut from our earnings. This is unfortunate. We urge the Union government to withdraw the tax,” Raghu N, a representative of the drivers, said in a video.
In view of the new policy being initiated by the government, the impact on the overall ride-hailing business would be quite adverse for both driver and riders, said Aravind Sanka, co-founder of Rapido. “This policy might lower the rate of consumers opting for auto rides, further making commuting less feasible and hassle-free,” he added.