Tax Authorities Reportedly Think That Uber is Liable for Service Tax.

Tax Authorities Reportedly Think That Uber is Liable for Service Tax.

Indian service tax authorities have sought information from Uber’s Indian subsidiary over the non-payment of service taxes. Online cab service Uber seems to be in more trouble.
A service tax department official said that Uber is liable to pay service tax to the government since it is delivering a taxable service. Currently the taxi services are not in the “negative list” for service tax and hence attract a tax of 12.36%. The official added that other cab service providers also pay service tax and therefore they do not see the reason why Uber shouldn’t do so.

Uber doesn’t own these taxis or employ drivers on its own, rather it ties up with taxi fleets or cab owners to offer its service. If the turnover is over Rs 10 lakh and individual taxi drivers may not attract tax if their turnover is lesser than this limit then service tax is applicable. However in this case, ET states that the tax authorities are taking the combined turnover into account.

The report alos mentioned that while Uber has an Indian entity called Uber India System, it still operates in the country through a Dutch-based entity Uber BV. The official told that the tax investigation is currently limited to Mumbai although they are looking to expand this probe into cities where Uber is currently operational. Uber offers its services in 10 Indian cities as of now, including Bangalore, Delhi, Mumbai, Hyderabad, Chennai, and Ahmedabad among others.

Google tax case seems somewhat similar to the Google Indian tax case earlier, wherein the Income Tax Department had reportedly imposed a Rs 76 crore penalty on Google India for misleading the department with deflating income, and crediting income to Google Ireland.
For Indian businesses these situations create a disadvantage, because their TDS is cut while companies like Uber is not. There needs to be a level playing field, and allowing these situations only unfairly creates an incentive structure for businesses to not set up operations in India. If companies are operating in India, it should be under Indian jurisdiction.

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