Cab Unions Oppose GST On Earnings; Warns Of Livelihood Crisis

Cab drivers across India are rallying against a proposed Goods and Services Tax (GST) on their earnings under the subscription-based model offered by ride-hailing platforms. Their collective outcry highlights fear of diminished earnings, mounting costs, and a potential setback to the progress made in securing stable incomes for gig workers.

Leaders from unions across Rajasthan, Uttar Pradesh, Tamil Nadu, and other states have called on the government to scrap the proposal, arguing that it amounts to double taxation.

Drivers under the subscription-based Software-as-a-Service (SaaS) model already pay GST on their subscription fees. Any additional GST on ride fares would, they argue, erode their earnings and jeopardise their livelihoods.

Key Concerns Raised

• Reduced Earnings: Double taxation on subscription fees and ride fares could drastically cut into drivers’ already modest earnings.
• Increased Costs: The affordability of essential tools offered through the SaaS model may be jeopardised.
• Adverse Impact on Women: Women drivers, already a minority in the gig economy, could face additional barriers due to higher costs.
• Reversal of Progress: Drivers may be forced to return to traditional aggregator models that take high commissions or informal jobs with less stability.
• Marginalised Communities at Risk: Vulnerable groups that rely on gig work could see their livelihoods vanish.

A Transformative Model Under Threat

The SaaS model, introduced to promote driver empowerment, eliminates commission-based deductions, allowing drivers to retain their entire income after a reasonable subscription fee. This model also provides access to essential tools such as ride-matching algorithms, navigation, and digital payment systems.

Zahir Hussain, General Secretary of the Urimai Kural Drivers’ Trade Union, emphasized the importance of the model, stating, “The SaaS model has empowered drivers by eliminating hefty commissions and giving them full control over their income. However, imposing additional GST on ride fares will increase costs, leaving drivers with reduced earnings. This policy will undo years of progress and push many back into informal, insecure jobs.”

Grassroots Concerns

Union leaders from across the country echoed Hussain’s sentiments. Kuldeep Singh, President of the Jaipur Mahanagar Tepayia Vahan Chalak Union, explained how the proposed tax creates a "double burden" for drivers. "Drivers are already paying GST on their subscription fees. Adding a tax on every ride would create an unsustainable financial strain. This model is a business tool and a lifeline for thousands of families across India," Singh said.

RK Pandey, President of the Chaalak Welfare Samiti in Uttar Pradesh, highlighted how the change could disproportionately impact women drivers. “Women have found safer, tech-enabled ways to earn through the SaaS model. If GST is imposed, it will raise costs and drive many out of the system,” Pandey warned.

The unions are urging the government to exempt SaaS-based earnings from additional GST and classify such income as personal earnings, which are already subject to income tax. "The government must adopt a progressive approach and ensure policies do not harm those at the grassroots level. The SaaS model is a stepping-stone to equitable growth, and its benefits should remain accessible to all,” Hussain added.

Balancing Taxation and Livelihoods

The widespread opposition underscores the delicate balance policymakers must strike between taxation and supporting India’s burgeoning gig economy. With millions of drivers’ livelihoods at stake, the issue has become a litmus test for the government’s commitment to inclusive economic growth.

As debates continue, cab drivers across the country await clarity on whether the government will heed their pleas or move forward with a policy they claim threatens their hard-won financial independence.

Utkarsh Agarwal

BW Reporters The author is the Editorial Lead of BW Auto World