5% GST on auto-rickshaw services provided through e-commerce platforms

Auto-rickshaw services provided through e-commerce platforms would attract 5 per cent GST from January 1, 2022.

The Revenue Department under the Finance Ministry through a notification dated November 18 withdrew the GST exemption available to auto rickshaws providing passenger transport services through e-commerce platforms.

While the passenger transport services provided by auto rickshaw drivers through offline/ manual mode would continue to be exempt, such services when provided through any e-commerce platform would become taxable at 5 per cent effective January 1, 2022.

"This amendment shall have a direct impact in the case of e-commerce industry players who provide an online platform to a large number of auto rickshaw drivers for connecting with riders. E-commerce industry has established a very crucial place in the market when it comes to facilitating passenger transport services owing to its cheaper, convenient and flexible manner of booking rides.

"The newly inserted provision would render rides booked through e-commerce platform costlier thereby creating tax disparity for the same service when provided through offline vis--vis online mode," EY India Tax Partner Bipin Sapra said.