Auto rickshaw rides booked through app aggregators like Ola, Uber are set to get more expensive from January 1, 2022 with the Union government deciding to impose 5% GST on these rides booked online. Demanding a reconsideration of the move, an Uber spokesperson told The Times of India that while they appreciate the need for the government to collect revenues, they have urged it to reconsider this tax, which will end up affecting the earnings of auto drivers as well as the government’s digitisation agenda. 

The Union government has declared that it will levy a 5% GST on auto rides booked online from January 1, 2022 ending an existing exemption. Auto rides taken from the streets will continue to be GST-free. “We urge the government to reinstate the GST exemption for online auto products in the ride-sharing industry to ensure riders, drivers and cities can keep benefiting from the growth in this sector,” he added. 

Stating that earnings have nosedived due to COVID-19 and it is unfortunate that the government now wants 5% cut from the earnings, Raghu N, a representative of Peace Auto, an association of auto-rickshaw drivers, has asked the Union government to withdraw the tax. 

In view of the new policy being initiated by the government, the impact on the overall ride hailing business would be quite adverse for both driver and riders, said Aravind Sanka, co-founder of Rapido. “This policy might lower the rate of consumers opting for auto rides, further making commuting less feasible and hassle-free,” he added.