Ola, Uber, Rapido Seek GST Clarity on New SaaS-Based Model

Ride-hailing platforms, including Ola, Uber, and Rapido will reportedly reach out to the Central Board of Indirect Taxes and Customs (CBIC) for clarity on GST applicability to their SaaS-based operations, according to a report published by The Economic Times.

Under the Saas model, these platforms charge a fixed subscription fee to gig workers instead of commission. Companies are likely to raise concerns over the lack of clarity stemming from the inconsistent tax treatment of the SaaS model.

This came after the Karnataka Authority for Advance Ruling (AAR) permitted ONDC-affiliated Namma Yatri to operate without levying GST. However, the authority stated that Uber and Rapido still remain liable to pay tax under the same model.

Reacting to AAR’s ruling, the ride-hailing platforms alleged that the decision is “distorting competitive parity” in the sector. “Some companies have taken a no-tax position on the subscription model, and this creates inequality for tax-paying players who charge commission,” people said, as quoted by the report.

In 2023, Uber took the issue to the Karnataka Authority for Advance Rulings and the GST Council, arguing that the differing tax treatment of such models creates regulatory uncertainty and puts companies at a competitive disadvantage.

Ola rolled out a nationwide SaaS-based zero-commission model for its cab drivers, enabling them to keep their full earnings by paying a daily or monthly subscription fee.

The Bhavish Aggarwal-led platform nnow offers a 30-day subscription at ₹67 per day, granting drivers full platform access without any commission deducted from their rides.

The model, previously in use for autos and bikes, has now been extended to cabs as well. Competitors like Rapido and Namma Yatri had launched similar subscription-based services for auto drivers last year.

On the other hand, cab aggregators generally charge a commission fee of around 20-40% from drivers. This move echoes the strategies of newer players like Rapido and Namma Yatri, which launch SaaS-style models --- charging drivers a fixed daily or monthly fee so thet can retain 100% of their earnings.