GST Council to explore simplifying procedures, clarify taxation of ride-hailing apps

Subscribe to enjoy similar stories.NEW DELHI: The Goods and Services Tax (GST) Council is likely to meet before mid-July to consider proposals to simplify procedures and clarify matters including the taxation of ride-hailing app companies, according to two people aware of the development.The proposals likely to make it to the agenda include making tax registration and claiming tax credits simpler. Simpler GST registration procedures and input tax credit norms are expected to make compliance easier for businesses.While the reforms aim to streamline registration and invoice reconciliation, taxpayers continue to face practical challenges around withdrawal of registration applications and input tax claim-related procedural certainty, said Ikesh Nagpal, lead-indirect tax at AKM Global, a tax and consulting firm.The meeting may be scheduled before the monsoon session of Parliament that runs from July to August.In the case of cab aggregators such as Uber and Rapido, the effort will be to clarify the taxability of their operations.

The issue arises from Section 9 (5) of the Central GST Act, which states that e-commerce operators are liable to pay 5% GST on passenger fares. The notified services include those provided by radio-taxis, motor cabs, maxi cabs and motorcycles.However, app companies that follow a subscription model—where drivers pay the platform a fixed fee—contend that they merely connect drivers and passengers and do not decide the fares or collect them.

If a platform does not decide or collect fares it is not liable to pay tax, according to the ride-hailing companies.“The idea is to bring clarity in the law itself to avoid disputes. We cannot let enforcement personnel interpret this, leading to potential disputes.