Ola not obligated to deduct tax at source on payment to driver: ITAT

Tribunal says Ola is a mere intermediary; its role is limited to managing OLA app, facilitating transport services by the driver to the rider and payment collection via e-wallet on driver's behalf

An income tax tribunal has held that transport aggregator Ola is not required to deduct withholding tax on payments to drivers. The Chandigarh-based income tax appellate tribunal (ITAT) held that Ola acts as a mere intermediary.

ITAT observed that the role of Ola is limited to managing and operating the OLA app, facilitating the provision of transport services by the driver to the rider and payment collection via e-wallet on the driver's behalf.

It said the driver is solely liable for any accident/incident involving the vehicle while providing taxi services, and Ola has been stated not to be liable for any such incident, according to agreements between them. It holds that Old and the driver are independent contractors.

The tribunal held that it is clear from the contracts between Ola and the driver and with the rider that the underlying contract for transportation service is between the driver and the rider.

It stated that the driver is entitled to the fare for rendering transportation services to the rider and the person responsible for payment in such a case is the rider alone and not Ola.

Earlier, the assessing officer had emphasised on the contractual relationship between the rider and the driver which was upheld by the commissioner of income tax (appeal).

The tribunal held that the assessing officer and the commissioner erred in concluding that Ola was providing transportation services which was sub-contracted to the driver and consequently holding that Ola was liable to deduct tax at source for the assessment year 2018-19.