Karnataka ARR Likely To Reverse GST Ruling On Namma Yatri: Report

The Karnataka’s Authority for Advance Ruling (ARR) is reportedly considering reversing its earlier ruling on ride hailing platform Namma Yatri that said the company is not liable to pay the goods and services tax (GST) due to its subscription model.

As per an ET report, the authority sent notices to Namma Yatri’s parent Moving tech and its majority stakeholder Juspay to appear before the ARR, if they want to counter the assessment. 

Juspay has denied to comment on the Inc42’s query.

For context,  Namma Yatri was initially developed and operated by the fintech giant Juspay. Later, in November 2023, Juspay hived off Namma Yatri and other mobility apps into a separate independent entity, Moving Tech Innovations.

This move was taken to make Namma Yatri more independent in the mobility sector.

In September 2023, the Karnataka ARR ruled in the favour of Namma Yatri, exempting it from paying GST as the platform offered a subscription-based model which allowed drivers to pay just a fee for using the SaaS platform instead of paying per ride commission to the company.

However, ARR said it gathered from Moving Tech’s application that the company acquired Namma Yatri as a “going concern”. The authorities stated that it can revoke the GST ruling as Juspay acquired it when owned and was responsible for the ride-hailing platform.

Founded in 2022, Namma Yatri was launched by Juspay in partnership with Nandan Nilekani’s BECKN Foundation and backed by Bengaluru’s Auto Rickshaw Drivers’ Union (ARDU).

The mobility app’s auto-hailing services were first launched in Bengaluru and has since expanded to cities across India – including Kochi, Mysuru and Tumakuru. In Kolkata, it was introduced as Yatri Saathi and also facilitates metro bookings on its platform in Chennai.

In August 2024, the company expanded its zero-commission cab service in Delhi under “Yatri”, which is a part of the Open Network for Digital Commerce (ONDC).

The Zero-Commission Ride Hailing Space

From protests to transitions in business models, India’s ride-hailing startups have seen it all in the past few months. 

Till last year, Namma Yatri and Rapido had an edge due to their zero-commission models. Drivers prefer this model, as it helps them earn more and keep 100% of their earnings, in return of paying a fixed subscription fee to the platform.

In February, Chennai-based auto and cab drivers union announced a boycott of Ola and Uber over high commissions charged on daily rides.

Similarly, last year auto and taxi drivers in Delhi NCR launched a two-day strike to protest against app-based cab services like Ola for allegedly dominating the transportation sector, resulting in  reduced income and customers of traditional drivers.

Notably, Ola used to charge a 15-20% commission fee on the total fair earned by the cab drivers during each ride. However, it also adapted the subscription model.

In February, Uber also shifted its business model to zero-commission for auto drivers in India.

A fair reason to transition to the zero-commission model is also the tax savings. While platforms like Namma Yatri were exempted from the tax liability due to its model, Ola used to pay 5% GST on the commission income earned through drivers.