Drivers working with Ola and Uber may have to pay more tax on their leased vehicles after the rollout of GST causing a hike in expenses by upto Rs 1 lakh per year, according to a report by Economic Times. The report states that those drivers who are associated with leasing program of either of the companies may see a hike in tax rates from the existing 14 per cent to somewhere between 29 to 43 per cent.
“At Ola Fleet Technologies, we run a leasing programme for tens of thousands of driver-partners who may not be able to afford buying a car of their own. Presently, these driver-partners pay 14.5 per cent VAT. In the proposed GST regime, they will have to bear GST rates of 29 per cent to 43 per cent on the cars already leased, as an outcome of double taxation on existing leases,” the report stated Ola Fleet Technologies CEO Shalabh Seth as saying.
He adds that drivers associated with the program pay an estimated amount of Rs 825 a day as rental fee. This adds up to a total of Rs 25,000 per month. After the GST, this monthly rental fee is expected to rise up to Rs 35,000-Rs 40,000. This will result in a considerable decline in the income earned by drivers prompting protests and strike.
As per the ET report, the analysts estimate close to 7,000 or 8,000 drivers are linked with the leasing program and do not make up a large share of the whole business. However, it is likely to impact the business as the drivers may try to negotiate on their existing contracts or return the vehicles to the company.