If you were happy about the comfort of booking your rides sitting at home, think again. The comfort is likely to be costly from January 1, 2022! Did you know that the government has decided to charge 5 per cent GST on all the rides booked online through various apps. This is likely to hurt the growing industry and maybe many will decide not to continue in this profession!
The Union government has decided to levy a 5 per cent GST on all rides purchased online and this is going to happen from January 1, 2022. Now when you book your cabs or auto from the apps like Ola, Rapido and Uber, expect to pay more for the services you use.
In a statement, the Revenue Department, which is part of the Finance Ministry, cancelled the GST exemption for auto-rickshaws that provide passenger transportation services on online platforms. The Union government has declared that it will levy a 5 per cent GST on auto rides booked online from January 1, 2022, ending an existing exemption. Does this mean auto rides taken from the streets will continue to be GST-free?
A senior official from Uber said, “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.”
Post-Covid, the industry which was down and out, is slowly picking up and people too have started using the rides more freely since last one month. With this new policy from the Union government, itseems these online platforms will have a tough time to sail through in these pandemic times. Though Ola, Uber and Rapido top officials are trying to get the centre repeal the law, there is no response from the government thus making it still inconclusive.
Given the new policy being initiated by the government, the impact on the overall ride-hailing business would be quite adverse for both drivers and riders. “This policy might lower the rate of consumers opting for auto rides, further making commuting less feasible and hassle-free,” mentioned Rapido senior executive.