GST on Uber Rides: CBIC to meet with E-commerce Operators to resolve GST on Rides

The Central Bureau of Indirect Taxes and Customs (CBIC) has called a meeting of app-based ride-hailing services in Delhi on Monday to resolve disparities over the applicability of goods and services tax (GST) on rides booked through e-commerce platforms, following Uber India’s concerns about a lack of uniformity and a level playing field.

The meeting chaired by the CBIC chairman is being held to “identify and deal with concerns of electronic commerce operators regarding liability under Section 9(5) of the CGST Act and seek input from various stakeholders for the consideration of amendments or/and clarifications if needed in the law and procedures under the GST,” according to an email sent to ride-hailing platforms.

The meeting follows the Karnataka High Court’s September 25 directive to the CBIC to rule on Uber India’s representation on the matter within six weeks of hearing from all stakeholders.

In his judgment, Justice SR Krishna Kumar also directed Karnataka’s Authority on Advance Ruling (AAR) to resolve Uber’s January 5 application within six weeks. The court, responding to Uber’s request, stated that the company’s GST payment is dependent on the outcome of its petition. The court will resume hearing the matter on November 12.

Uber filed a petition with the High Court early this year, seeking clarification on Section 9(5) of the CGST Act, 2017, and whether e-commerce operators providing passenger transportation services are required to pay GST under the clause. The company sought court action to guarantee that the law was applied consistently and that all operators had a level playing field. It also asked the court to reimburse the GST paid, as well as the interest.

Section 9(5) of the CGST law mandates app-based ride hailing services to discharge GST liability for rides booked through the platform.

According to a report on September 19, ride-hailing platforms have slowed innovation and new investments due to a lack of clarity on the GST rates applicable under various business models for taxi and auto-rickshaw services.

Sections of operators were dissatisfied that the AAR in Karnataka had opposing views on the applicability of GST on auto-rickshaw trips, whilst Tamil Nadu’s authority upheld its application.

According to industry professionals, a lack of clarity in other states may result in diverse interpretations.

“The confusion exists in all states,” said an executive who refused to be identified.

The confusion stemmed from a recent order by Karnataka’s AAR that Rapido must pay GST on services given by taxi drivers via its app, classifying the driver’s services as Rapido’s. The verdict contrasted sharply with an earlier ruling in the matter of two operators, who were not required to pay GST on rides.