India’s GST law imposes a 5% tax on ride‑hailing services, but the SaaS model used by aggregators creates ambiguity under Section 9(5) of the CGST Act. IAMAI has urged a review of the tax’s applicability, while Karnataka has exempted subscription‑based platforms such as Namma Yatri. The dispute raises uncertainty for aggregators, potentially leading to unexpected liabilities and affecting driver earnings and consumer affordability.
A 5% GST rate is currently levied on ride‑hailing services booked through digital platforms.
Section 9(5) of the CGST Act requires Electronic Commerce Operators to pay tax on passenger transport services supplied via their platforms.
Karnataka has exempted platforms like Namma Yatri, which use a subscription model, from the GST liability that applies to other ride‑hailing apps.
IAMAI argues that under the SaaS model aggregators act as software facilitators, making it impossible to collect and remit the 5% GST, shifting the burden to drivers and consumers.
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