Uber, Ola face DG-GST Intelligence probe related to alleged tax evasion

Summons issued to officials of the two firms for hundreds of crores of alleged evasion

The Director General of Goods and Services Tax Intelligence (DGGI) has launched an investigation into ride-hailing firms Uber and Ola. The DGGI has issued summons to officials of the two companies related to alleged tax evasion worth hundreds of crores of rupees, according to the sources.

The tax liability dues for Uber India has reportedly been calculated as about Rs 800 crore, while as for Bengaluru-based Ola, it has been set at around Rs 300 crore. However, according to the industry sources, two different tax intelligence teams based in different cities have calculated the dues for the companies and sent the notices based on their interpretation. “This has resulted in the calculation of the tax at the rate of 15 per cent for Uber and 6 per cent tax for Ola,” said an industry source.

Industry sources said that these tax dues are related to the 2015-2017 period before GST (goods and services) kicked in and deals with services tax.

Both Ola and Uber confirmed that an investigation is being conducted by the  DGGI, but they didn’t share comments related to the tax liability.

"We are in receipt of a notice from the tax department relating to certain matters prior to 2017 in our mobility business. These pertain to the erstwhile service tax regime,” said Ola spokesperson on Monday evening. The SoftBank-backed company said it has been actively engaged with the department and are cooperating with the tax authorities and are confident that it will be able to resolve this satisfactorily. “Ola is a proud taxpayer and we comply with all our tax obligations and have contributed several thousand crores in taxes over the last 4 years alone,” said the Ola spokesperson.

“Uber is a law-abiding and compliant company. We are working closely with the authorities on all tax-related queries and will respond accordingly,” said an Uber spokesperson.

GST Intelligence has reportedly found that Uber India and Ola did not pay goods and services tax (GST) on the incentives paid to drivers for many years. Also, the firms have allegedly not paid the GST amount on ride cancellations.

Besides Ola and Uber, many tech companies have come on the radar of the income tax (I-T) department. The income-tax department recently conducted surveys at Instakart, a group company of e-commerce giant Flipkart, and food delivery firm Swiggy in Bengaluru. The surveys are related to an alleged bogus input tax credit connected to the external vendors of these firms, according to the sources. 

Last week, a team of I-T department officials reached the office of Instakart, located on the Flipkart campus in Bengaluru. They were investigating Merlin and Surya Services, which are the third-party vendors for Instakart. An I-T department team also landed at the office of Swiggy to conduct the survey. According to the sources, due to a third-party vendor Greenfinch’s alleged default, the department initiated a follow-up survey at Swiggy.