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Wednesday , 20 September 2017
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Cab aggregators Uber, Ola face higher lease payouts under GST

Under the new indirect tax regime, leasing of goods is regarded as a service and attracts a levy. Since there i no clear guidelines, the provision has created complexities for airlines, cab aggregators and cab leasing companies who are already struggling with the introduction with the introduction of goods and services tax (GST).

According to the rules, while input credit arising from procurement of both goods and services can be used in case of business class, input credit from services alone can be used for off-setting tax liability with respect to economy class travel. 

“Similar to business class, full input tax credit should be given to economy class ticketing too,” said a senior airline executive.

“We have sought continuation of the tax exemption. The impact is largely related to cash flows, as we will be able to claim an input credit against tax liability on sale of tickets and cargo space,” said a senior executive from Air India. 

 

Cab aggregators such as Ola and Uber, as well as its drivers, are facing almost double the taxes on leasing under the GST since the cost of cars which were leased during pre-GST and equated monthly instalments (EMIs) being paid after GST will become more expensive.

“The cost of EMIs on such cars will go up as much as up to 30 per cent. It is expected that a consumer who was paying an EMI of Rs 30,000 before the GST was implemented, will now have to pay Rs 45,000 on the same car,” the firm said. 

 

“There are still some open discussions on GST on leasing, there are some conversations that are happening, not just us, others are also doing the same,” said Amit Jain, president, Uber India. 

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