Battling violations list, Uber agrees to pay service tax in India

NEW DELHI: Taxi aggregator Uber, battling a ban on its operations over an alleged assault on a woman using one of its cars, has agreed to pay service tax in India after resisting it initially. “Company executives have agreed to comply…The company will soon submit adetailed plan,” a service tax department official in Mumbai aware of the development told ET.

Uber did not respond to a mail on this issue. The development gives a big boost to the department’s efforts in taxing e-commerce companies as Uber was seen as a test case. Company executives had earlier told service tax authorities that they should collect tax from the drivers as Uber does not have any presence in the country and the service is only provided through a mobile or online application.

Authorities, however, don’t want to collect tax from multiple cab drivers. They wanted the company collect the tax through a reverse charge mechanism and pass it on to the government, similar to what other firms in the same line of business do.



All services attract tax at the rate of 12% unless specifically exempted or included in the negative list. Taxi services are not on the list and therefore liable to pay tax. Authorities have argued that other cab services are registered with the department and pay tax. Service tax is liable only on revenue above .`10 lakh and an individual cab driver may not attract tax if the turnover is lower than the threshold.

But in the case of Uber, tax authorities are going to take into account combined turnover. Uber will, later this week, give a detailed plan of how it will comply, the official said. The San Francisco-based company has an Indian entity — Uber India Systems, an arm of Netherlands-based Uber BV — that provides IT back-up.