GST will spare customer but adversely affect driver-partners of cab aggregators

Double taxation on leased cars may make Ola drivers' businesses unviable

Customers of app-based taxi services may have reason to rejoice over lower rates from July 1 but the same can't be said of driver-partners. According to Ola Fleet Technologies Ltd, double taxation on existing leases of cars for drivers who don't own a vehicle may spell trouble.

While owners of app-based taxi services refused to speak about the impact that GST will have on pricing, Ola Fleet Technologies Ltd, a wholly owned subsidiary of Ola claimed that GST and its tax slab will make businesses unviable for driver-partners who do not own a car but lease it out. With GST for a July 1 rollout, driver-partners will now have to shell out anywhere between 29 to 43 percent in tax.

"We run a leasing program for tens of thousands of driver-partners who may not be able to afford a car of their own. Presently, these driver-partners pay 14.5 percent in Value Added Tax (VAT). In the proposed GST regime, they will have to bear GST rates of 29 to 43 percent on the cars already leased, as an outcome of double taxation on existing leases," Shalabh Seth, CEO, Ola Fleet Technologies Ltd said.

Companies fear that the double taxation for the rest of the lease period will lead to a driver-partner losing close to Rs 1 lakh till the end of lease term. This is expected have adverse effects on their livelihood and make business unviable. The company, however, categorically stated that the tax slabs will not have any impact on the customers of app-based taxi services.

OneIndia News