GST Council May Clarify Tax Rules for Uber, Rapido and Other Ride-Hailing Apps | Biz Flow Kit
The GST Council may hold a meeting before mid-July to consider reforms to ease the GST process and reduce tax disputes, along with the long-pending clarification on the taxation of ride-hailing platforms like Uber and Rapido.
The proposed reforms may comprise a simpler GST registration process and easier ITC claim provisions to enhance compliance for businesses. Experts mentioned that taxpayers still encounter procedural issues concerning invoice reconciliation, withdrawal of registration applications, and ITC-related certainty.
One of the major agenda items is anticipated to be clarification u/s 9(5) of the CGST Act on whether app-based cab aggregators operating on subscription models are obligated to file 5% GST on passenger fares.
According to the ride-hailing companies’ platforms, they act only as technology intermediaries and neither determine nor collect fares from passengers.
Because of the conflicting Advance Ruling decisions across states, the problem has become disputed. Previously, the GST council discussed the case in its 55th meeting in December 2024 but deferred a final decision for further examination by a panel of officers.
Industry stakeholders have cautioned that levying GST obligation on subscription–based platforms could surge ride costs for consumers and lessen earnings of driver-partners, particularly as many drivers are less than the GST registration limit of Rs 40 lakh annual turnover.
Companies have asked for a legal clarification to prevent future litigation and ensure tax certainty in the evolving digital mobility sector.
Read Also: Karnataka AAR Rules Rapido Has to Pay GST on Cab Service
Tax experts view the proposed clarification as a vital move to curb litigation within the rapidly expanding app-based mobility sector. Currently, ride-hailing platforms using non-commission models face significant uncertainty due to inconsistent enforcement and varying interpretations.
By formalising these rules within the GST framework, the government aims to ensure nationwide uniformity and resolve compliance disputes.
Beyond the ride-hailing sector, the GST council can discuss compliance revisions for enhancing seamless business operations. These may include measures to ease invoice matching, facilitate registration approvals, and make procedural transparency stronger for claiming input tax credit (ITC).
Businesses and tax consultants are viewing the upcoming meeting as the proposed revision could impact GST compliance practices for digital platforms and small businesses alike.
