Chennai residents fear new 5% GST on auto bookings will make rides costlier

The government’s decision to levy an additional 5 per cent GST on auto bookings made using apps has come as a surprise to commuters in Chennai, who worry that rides will get more expensive starting January 1, when the policy goes into effect.

Residents who use ride hailing platforms such as Ola, Uber, Rapido and Quick Ride to book autos are concerned their commute is likely to get more difficult in future.

Auto drivers have only recently started accepting bookings, although many still refuse to do so and demand a standard tariff, which is much higher than the booking charges.

“We are not aware about the GST on booking autos through apps,” M Sandya, an IT worker, told The Federal. 

“After a very long time in Chennai, we are able to get autos based on their meters. It is also very safe to ride in autos as all details about the driver, the vehicle, etc, are there. The GST Council must withdraw the 5 per cent tax on booking through apps,” she said.

“This amendment will have a direct impact in the case of e-commerce industry players who provide an online platform to a large number of auto rickshaw drivers for connecting with riders,” Bipin Sapra, a tax partner at EY India, told The Federal.

“The newly inserted provision would render rides booked through e-commerce platforms costlier, thereby creating tax disparity for the same service when provided through offline vis–vis online mode,” Sapra said.

Ride hailing platforms have established a very crucial place in the market when it comes to facilitating passenger transport services by offering cheaper, convenient and flexible services.

Last week Uber demanded a reconsideration of the move. In a statement, a spokesperson said: “The Centre has announced it will levy 5 per cent GST on auto rides booked online from January 1, ending an existing exemption. Auto rides hailed on the streets will continue to be GST-free. While we appreciate the need for the government to collect revenues, we urge it to reconsider this tax, which will end up hurting the earnings of auto drivers as well as the government’s digitisation agenda.”

The spokesperson urged the government to reinstate the GST exemption for online auto products in the ride hailing industry to ensure riders, drivers and cities can keep benefiting from the growth.