Are Ola And Uber Unfairly Charging GST On Toll & Parking Fees?

A Mumbai-based communications specialist tweeted something serious. He complained about Uber unfairly imposing GST unfairly on the toll taxes.

.@Uber_Mumbai is illegally charging GST twice on sea link toll (actual toll is Rs. 60) – they charge 63 saying it’s 5% GST – but then they charge GST on total also – which is travel time+toll! Also, their 5% calculation is incorrect also – charging approx Rs. 2 more. #crooks pic.twitter.com/4f7xAByWWu

— Sandesh Advani (@sandeshadvani) November 16, 2017

In response to Sandesh’s tweets, Uber tweeted back and confirmed about charging GST–

“Tolls paid are an expense associated with providing transportation services and thus, are subject to GST at 5%”

While I was under the impression that it must be only Uber, another tweet got my attention. The tweet highlighted the fact that its not just Uber, but Ola is also charging a GST on toll tax.

@MORTHIndia Ola & Uber are levying 5%GST on toll, if toll is ?30 they charge ?31.5 in bill, is that correct? pic.twitter.com/1SVjcc5Qa1

— Gaurav Singh (@sng_gaurav) November 7, 2017

GST On Toll & Parking Fees: Fact Check

I took a note of these tweets and started glancing through my earlier invoices. I realised that the cab aggregators are charging GST not only on tolls, but also on parking fees at railway station and airport. Apparently, parking fees at railway station and airport are inclusive of GST. I was confused and perplexed and still figuring out the gaps considering my limited knowledge in taxation and accounting.

However, Advani sounded confident about Uber being unfairly charging 5% GST on toll taxes. He also feels that relevant authorities should take an immediate note of this.

This means, if your Uber or Ola is paying any toll or parking for picking you from defined locations like Airport and Railway Stations, then your cab aggregator is charging a 5% GST on the amount paid for toll and parking.

What Do The Experts Think?

ClearTax , a tax-focused  technology company, does not find merit in imposing GST on toll taxes and parking fees. Archit Gupta, Founder and CEO, ClearTax said,

“There is no GST on toll tax, so the government does not collect GST on toll. If toll tax and parking fees are paid as reimbursements, as they were incurred purely on behalf of the person travelling, GST is not required to be collected on them”

We reached out to various auditing firms for their perspective on this issue as the intent was to find out the reality. However, no one responded citing reason that they cannot comment on individual companies.

Are the GST imposition by these cab aggregators on toll taxes and parking fees fair and justified? We expect GST Council to take a note of this and offer a clarity to the millions of Indian riders who have been using these cab aggregators everyday.

We would also welcome thoughts from our readers and tax experts on this issue.