Income Tax Dept Probes Uber India’s Finances; Asks Dutch Unit For Details

SUMMARY

The I-T department reportedly believes that Uber India should pay TDS in related party transactions concerning Uber BV’s revenue

The Indian subsidiary claims that Uber India is not a dependent entity of Uber BV

Previously, the ITAT has also held that Uber BV has not entered into any contracts concerning its Indian operations

The Income Tax Department has reportedly asked US-based Uber’s Netherland unit– Uber BV to share certain financial information. The department has sought details of transactions with Uber India from FY20 and FY21.

The I-T department has launched a probe into the operations of Uber India. The latter claims that Uber India is not a dependent entity of Uber BV, but the department has brought some transactions under the scanner.

The I-T department claims that the Indian subsidiary of the ride-hailing company is the front face of Uber BV and treated it as an ‘assessee-in-default’ over the non-compliance of TDS rules.

That is, the I-T department reportedly believes that Uber India should pay TDS in related party transactions concerning Uber BV’s revenue.

According to the I-T department’s reasoning, Uber India (the dependent agency) acts on behalf of a foreign enterprise (Uber BV) and the income achieved by the latter through transactions with the former will be taxed where the agency is located (in India).

On the contrary, the Income Tax Appellate Tribunal has held that Uber India is not responsible for making the TDS payments since Uber BV has not entered into any contracts with the driver-partners in India and no work was carried out by them.

The matter is being heard in the Bombay High Court.

If a related transaction is proven (that Uber BV is earning via Uber India’s operations), the latter will be liable to pay taxes, the ET report quoted a source.

The Dutch-based Uber step-down subsidiary incurred a loss of $4.80 Bn in FY20 and $4.62 Bn in FY19. Thus, the company paid any levied tax to the government of the Netherlands, and no tax was deducted in India.

Notably, besides the I-T department, the company is also in trouble with the Bombay High Court for flaking the Motor Vehicle Aggregators (MVA) licencing guidelines. It is being held for another case in Delhi High Court for discriminating against the specially-abled.

Uber’s Indian subsidiary is allegedly undergoing a difficult time in the country owing to several factors including hikes in fuel prices, cab cancellations by drivers and growing dissatisfaction among consumers.