Bengaluru, 23 December 2024: The Urmai Kural Drivers Association has protested against Government’s proposal to impose GST on ride-hailing subscription models citing it could severely impact drivers’ earnings and jeopardise the gig economy’s growth.
Ride hailing platforms have been a boon for the public at charge who depend on them for daily commute since years now. However, even as the expectation for ride availability is on the rise, especially with the public expecting such services to expand beyond busy cities and towns, a lot of this depends on the earning capacity of driver partners. With many ride hailing platforms working towards onboarding more drivers, Government’s proposal to consider taxing rides has got many drivers now concerned about its impact on their earnings.
Zahir Hussain, General Secretary, Urimai Kural Drivers Trade Union, pointed out that the subscription model has been a game-changer for drivers, providing them with financial independence and a more straightforward earning structure than the traditional commission-based system.
Speaking on the issue, Mr. Hussain said “In the beginning, the challenge was to come to terms with the exorbitant commissions’ drivers had to pay as a part of the still prevalent commission-based model of earning. However, when the more recent subscription-based model was introduced, there was a lot of relief as it put the earning power back in the hands of the driver, the real service provider. The feature of ‘no payable commissions’ and simply paying an upfront subscription fee means that the driver earns the entire fare, with no hidden charges and full transparency, boosting our earnings. But now with the government deliberating on imposing GST on the subscription model too, we are again staring at a questionable future. We already pay a subscription fee on which GST is paid by the platform. So, to pay GST on every ride again is not a fair expectation.”
Many drivers have moved from the traditional commission-based model to the subscription model to benefit from the freedom and increased savings. There has been a 20% increase in the number of drivers interested to join ride-hailing services and the overall job opportunities created for the gig economy. Transactions in the subscription-based model are simple and straight forward. Once you enrol, the platform acts as a lead generator, connecting drivers to passengers around the city. Drivers choose these rides basis their convenience and on completion of the rides, settlements happen directly between the driver and the passenger, outside of the platform.
“In the commission model hefty amount was being deducted from our earnings, sometimes even up to 40 percent. Even if incentives were offered, it would come into play after a certain number of rides that had to be completed in the day. But this was also not guaranteed. In the subscription-based model, we can take as many rides as per the subscription and have full control over our fares too. But if we now have to pay tax on every ride, it will really hurt us.,” said Aravindhan N, an auto driver who works across multiple platforms.
Ramesh, an auto driver operating largely on a SAAS model platform added “Since we choose the passengers basis our convenience and ease of logistical operations, there is no issue of facing penalties for cancelled rides either. With the subscription platform, we retain full control and there is no fear of delayed settlements. This model has really given a boost to the driver community, and we should not take away the social good it has done for us.”
“The way I look at it, the subscription model provides us the best of both worlds – with the use of technology we can locate more passengers, complete more rides, and thus enjoy the benefits of a digital economy. At the end of the trip, we also benefit from 100% fares with no deductions, making it a viable model for us. Therefore, I would urge the GST Council and relevant authorities to sincerely reconsider their proposition and allow subscription-based ride hailing services to continue as is, with no tax imposed on our earnings.”, added Mr. Hussain.