Ride-hailing major Uber has urged the government to reconsider its recent decision to levy a 5 per cent Goods and Services Tax (GST) on Auto rides booked online from January 1 next year.

The government must reinstate the GST exemption for online Auto products in the ride-sharing industry to ensure riders, drivers, and cities can keep benefitting from the growth in this sector, an Uber spokesperson said.

Bringing traditional goods and services online has benefitted Indian consumers and workers, something the government recognises in its support for "Digital India". According to Uber, this GST tax creates an uneven playing field and goes against this vision of digitisation of services, products, and payments.

"While we appreciate the need for the government to collect revenues, we urge the government to reconsider this tax, which will end up hurting the earnings of auto drivers as well as the government's digitisation agenda", the spokesperson added.

It was highlighted that lakhs of auto drivers across India rely on Uber and other apps to earn a living. Riders, especially women and the elderly, like booking an Auto via an App because of the safety and convenience that comes with it. But they also value affordability. This tax will lead to a rise in platform fares and a corresponding drop in demand. Riders and drivers will both lose out in this scenario, according to Uber.

Moreover, there are also questions over whether this tax will result in revenue gains for the government. As demand shifts to street hail, the revenue from GST applied selectively to online bookings is likely to be marginal, at best, according to an Uber spokesperson.

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