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Uber India Shifts Tax Onus on to Cabbies

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Uber India Systems Pvt. Ltd, the Indian subsidiary of US-based transport app provider Uber Inc., which has recently come under a lot of flak for not paying any service taxes in India, is now passing the buck on to drivers or owners registered with it as members.

Uber offers cab services to nearly 1,200 cab operators in top 10 Indian cities. Uber does not have any presence in India and lends only tech support to its US based parent company but it has till date not paid a single penny by way of service tax in India when cab services in India are supposed to be taxed at the rate of 12%.

Uber Cab drivers

Uber operates in India through a mobile app. After downloading the Uber app on their cellphone devices, users can book cabs by registering their credit card details. High end cars like Audis and BMWs are made available to users for a little extra than the normal car fare, which makes the app hugely popular with luxury car lovers. Customers are not required to pay their drivers at the end of the ride, the fare being charged directly to their credit card.

Besides that, drivers can register with Uber to become members as well.

While other cab operators in India like Meru, TabCab and Ola pay service taxes ad valorem, Uber has very conveniently evaded paying it so far.

The authorities in India meanwhile have been tightening their noose on top business players for tax defaults. The RBI had, in a crackdown in August, asked Uber to stop receiving payments with single-factor authentication from 31 October, which would effectively mean that it will have to shut shop by the end of the month here.

When contacted, Uber had claimed it was not a tax defaulter. The Mumbai service tax commissioner, S.K. Solanki, had taken strong exception to that and gone on record to say, “I don’t understand how they are different from any other taxi operator like Meru, TabCab etc. who all pay service tax. We are very sure that either Uber pays us the tax or cabbies do so. But getting it from some 1,200 cabbies individually is not easy.”

“We have sent a tax enquiry to Uber Inc. So far, they have not paid us a single penny in taxes. We have not sent them a demand notice as they don’t have an office in the country, but are operating through their Netherlands arm,” Mumbai service tax commissioner S.K. Solanki said.

Evelyn Tay, Uber communications head for the Asia-Pacific region, had earlier said that Uber complies with all applicable tax laws and pays the relevant tax in every territory it operates in.

Now under fire, the San Francisco based company is trying to shift all onus for taxes on to the cabbies.

This is not making things any easier for the tax authorities in India. Collecting taxes from nearly 1,200 cabbies located in different cities and ensuring that they register, pay tax and file returns is not going to be easy.

A company which has Goldman Sachs and Google Ventures among others as investors and which gives free iPhones to all its drivers as they go about connecting to people in need of their services through the Uber mobile app is certainly expected to behave more responsibly.

It remains to be seen how the cab operators who are registered with them and who have, till date been highly satisfied, react to this statement from the company.

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