Uber, Other Cab Aggregators Seek Tax Clarity from Finance Ministry, GST Council & AAR

Several app-based ride-hailing services, including Uber, have approached the Union Finance Ministry, the Goods and Services Tax (GST) Council, and the Authority for Advance Rulings (AAR) to clarify their tax obligations.

This move follows a recent decision by the Karnataka AAR, which ruled that Bengaluru-based direct-to-driver app Namma Yatri is exempt from paying GST, ET reported.

In the case involving Juspay Technologies, the company behind the Namma Yatri mobility platform, the AAR relied on the dictionary definition of the word “through.” It concluded that merely linking service providers with customers via a digital platform does not constitute a supply of service and is thus not subject to tax.

The same Karnataka authority had previously issued an opposite ruling in the case of Opta Cabs Pvt Ltd. Additionally, the Tamil Nadu Advance Ruling Authority, in a recent decision regarding Balat Enterprises Pvt Ltd, held that the company, which provides a platform for small business owners to connect with customers, is liable to discharge tax under Section 9(5) of the CGST law for specified services.

Consequently, other players in the industry are now seeking clarity on the interpretation of the word “through” under Section 9(5) of the CGST law and the corresponding tax implications for their services.

Uber has filed an application for an advance ruling in Karnataka, seeking clarity on the GST law, the report said.

“Contrary advance rulings have created uncertainty in the industry. We are seeking clarity on the tax position to ensure there is a level playing field and consistent tax application across all industry players,” the spokesperson said.

Earlier this year, the Karnataka transport department fixed uniform fares for all taxis plying in the state, including metre-based taxis.

Under the new regime, the app-based cab aggregators will not be able to levy surge charges to customers during peak hours.

The app-based aggregators have also been under the radar of various other state governments, including Delhi and Maharashtra, for different reasons.

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