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GST Finalized: Ola, Uber Rides To Be Cheaper, Here's How

Finally, the whole hullabaloo about GST is coming to an end, with the tax scheduled to come into action from July 1, 2017. One of the many benefits that the common man is expected to garner from the GST is a mild reduction in the monthly cab budget. Yes, starting July 1st, you might witness a small reduction in the daily cab fare that you were paying as the incidence of tax will come down to five per cent for bookings made on cab aggregators like Ola and Uber.

Under the current tax laws, a tax of six per cent is levied on the cab rides booked through cab aggregators. Starting 1st July, the GST will result in reducing this figure by one per cent and a commuter will have to shell out five per cent tax on the rides they book through cab aggregators. This is the rate closest in the various bands of GST rates of 5, 12, 18 and 28 per cent.

According to a recent report by business research firm RedSeer Consulting, despite supply side disruptions and regulatory challenges, online cab aggregators like Uber and Ola completed half a billion rides in the year 2016. This means the market saw 280 per cent growth compared to 2015, when the industry witnessed 130 million rides.

SoftBank-backed, home-grown company Ola and San Francisco-based Uber account for a majority of this growing market.

Industry experts are hopeful that the reduction in fares because of the tax reduction would further boost the already thriving industry. It has been witnessed that the ease of booking and the reasonableness of prices has contributed majorly to the growth of this market over the years.

Amit Jain, President of Uber India and South Asia is extremely excited about the move. In a statement to ndtv, he said, " by ensuring that the new rate structure is not inflationary, the government has demonstrated its pro-consumer, pro-business stance."

The Goods and Services Tax (GST) bill, which was first introduced in the 2006-07 Union Budget and was scheduled to be implemented in 2010-11, was finally passed in the Parliament in August last year (2016). From July 1, 2017 onwards, all major taxes in India like excise duty, octroi, service tax, special additional duty and VAT will be subsumed into a single tax called GST.

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