Ola-Uber Launches Subscription Service: Auto Drivers Get Full Payment per Ride, No Commissions!

Now, auto-rickshaw drivers will receive complete payment for each ride through Ola and Uber. To facilitate this, both cab service providers have launched subscription-based plans.

Auto drivers will benefit from this plan because they won’t have to pay commissions to the companies after each ride. Our commuters and Rapido have already initiated such services.

Ola has launched this model in several major cities including Delhi-NCR, Mumbai, Bangalore, and Hyderabad. At the same time, Uber’s service will be available in 6 cities including Chennai, Kochi, and Visakhapatnam.

Shift in Payment Structure for Auto Service Aggregators

Under the new plans, auto service aggregators will now collect a fixed fee per day or week from drivers instead of commission on every ride. Additionally, drivers will not be required to pay any charges apart from the platform fee. In this model, the fare for each ride booked by the customer will go directly to the driver. Notably, there is no mention of subscription plan fees.

According to a report, drivers providing services through Rapido are currently paying a daily fee ranging from Rs. 9 to Rs. 29, while our passengers are being charged Rs. 25 per ride or Rs. 3.5/ride for ten rides or more, with no additional fee thereafter.

Pros and Cons of Subscription Schemes

Ola and Uber are gradually rolling out services on a commission-based model in many cities. Under this model, the platform takes a portion of the fare as commission or booking fee for each ride, while the remaining portion goes to the driver’s share. Additionally, the platform handles ride pricing and facilitates online payments.

However, Ola and Uber do not allow online payments in their subscription plans, and they do not specify the fare for rides. This could pose a disadvantage as drivers may be able to charge arbitrary fares for rides.

Implications of 5% GST Benefit for Service Providers

With the decision to grant a 5% GST benefit to service providers, Ola and Uber may now enjoy this tax advantage on their services. However, as tax experts suggest, this model could lead to disputes between app operators and tax authorities. 

This stems from the Advance Tax ruling in September 2023, stating that GST registration and payment are not necessary for aggregators. Yet, clarity is lacking on whether this will apply to other platforms or not.

As per Section 9(5) of the Central GST Act, entities such as e-commerce operators, ride-hailing platforms, food delivery firms, and online retail service providers are required to collect and remit 5% GST in the form of tax. This includes drivers, restaurants, and e-marketplace sellers registered on their apps.