Bharat Taxi and the GST question: Policy Clarity Needed to Empower Drivers

The launch of the driver-owned and subscription-based ride-hailing platform Bharat Taxi marks a pivotal moment in India’s evolving gig economy. Designed as a cooperative and low-commissioned alternative to traditional aggregators, the platform strives to restore control and dignity over earnings to auto and cab drivers who form the backbone of India’s urban and semi-urban mobility networks. 

However, as this promising model expands, a fundamental policy question is becoming more pressing: will India’s tax framework support innovations that empower drivers, or inadvertently undermine them? 

At the core of the issue is the proposed 5 percent GST on ride fares under the subscription-based or SaaS ride-hailing model. Unlike commission-driven platforms, which charge and deduct a percentage of every trip, SaaS models function differently. Drivers pay a fixed membership fee for access to technology that helps them connect with travellers. Fares are agreed directly between drivers and passengers and collected offline. The platform neither controls pricing nor handles payments. 

This distinction is critical. Treating SaaS platforms at par with traditional e-commerce aggregators for GST purposes blurs both legal and functional realities. Section 9(5) of the GST Act assigns tax liability to e-commerce operators only when they control the supply and collect payments. In the SaaS model, neither condition applies. 

The emergence of Bharat Taxi makes this difference difficult to overlook. Structured as a cooperative, the platform reflects a deliberate shift towards driver ownership and reduced platform dominance. Imposing GST on ride fares under this model would, in effect, penalise drivers for choosing platforms that offer them fairer working conditions. 

Driver unions have begun voicing this concern more explicitly. Zahir Hussain, President of the Tamil Nadu Auto Call Taxi Drivers Union Federation, said, “We welcome the government’s initiative in supporting Bharat Taxi and are seeking an opportunity to formally present our case to the Finance Minister. Platforms such as Bharat Taxi, Namma Yatri and Rapido operate on a SaaS model where drivers pay a subscription fee and manage fares independently. These platforms should receive similar treatment under GST. Imposing GST on every ride will directly reduce drivers’ daily earnings, especially when most are already outside the GST net.” 

This concern is not merely theoretical. The majority of drivers operating on SaaS platforms earn well below the Rs 20 lakh threshold for GST registration, with average annual incomes in the range of Rs 2 to 3 lakh. They are legally exempt from GST on their services. Levying tax on ride income that does not flow through the platform effectively amounts to taxing individuals who are otherwise outside the tax framework. 

Drivers across multiple states have petitioned the government to clearly differentiate between commission-based aggregators and discovery-only platforms. Their argument is straightforward: offline auto and taxi rides are not subject to GST, and digitising the same service should not, by default, make it taxable. 

If the policy objective behind Bharat Taxi is to enhance driver incomes, encourage formalisation and reduce dependence on opaque algorithms, tax policy must align with that intent. A uniform GST approach that overlooks business model differences risks pushing drivers back into informal systems, undermining the very goals of digitisation. 

The GST Council has consistently emphasised simplification and equity as guiding principles. Providing clear and differentiated tax treatment for driver-owned SaaS platforms would be a logical extension of that philosophy. As Bharat Taxi gains traction, the Council has an opportunity to reinforce India’s commitment to inclusive digital innovation by ensuring that driver empowerment is not diluted by unintended tax burdens.