Govt mulls clarity on GST for cab aggregators amid SaaS vs commission model divide
The government is actively reviewing a proposal to clarify the Goods and Services Tax (GST) treatment for cab aggregators, as inconsistencies persist between platforms operating under different business models—namely the commission-based and Software-as-a-Service (SaaS) models, CNBC-TV18 has learnt.
Sources told CNBC-TV18 that “the Central Board of Indirect Taxes and Customs (CBIC) is currently studying industry representations seeking tax parity, and may soon escalate the issue to the GST Council.”
The move follows the Karnataka High Court's directive to CBIC to consult stakeholders and make appropriate recommendations.
Tax treatment differs based on business model
Currently, cab aggregators following a commission model—like Uber and Ola—levy GST on each ride at 5% without input tax credit (ITC) or 12% with ITC. The tax is collected from the passenger and remitted by the aggregator under Section 9(5) of the CGST Act.
In contrast, platforms operating under a SaaS model—such as Namma Yatri and Rapido—charge drivers a nominal daily or monthly subscription fee, on which 18% GST is applicable.
However, no GST is charged to passengers for the ride itself.
This dual structure has created a pricing disparity, according to industry stakeholders. They argue that although both models provide the same end service—transportation—they are taxed differently, putting commission-based platforms at a disadvantage.
“Commission or per-ride-based cab aggregator apps are becoming costlier to consumers, while SaaS-based apps offer cheaper rides. This isn’t due to operational efficiency but tax arbitrage,” said a senior industry executive.
