Uber under Service tax scanner in India

Competition in the Taxi market in India is heating up with Ola, TaxiforSure, MeruCabs and others fighting for the lions share. The taxi market in India is pegged at $13 billion, with only 5 per cent being organised.

Recently, Uber had come under the radar of RBI for supposedly not following the additional authentication of cards. RBI had mandated that a local service payment must have two- factor authentication and be routed through domestic gateways. Read more about this mandatory rule in India here.

 Now according to PTI, Uber has come under the scanner of Service Tax. PTI mentions that after allegedly falling foul with RBI, the US-based transport app provider Uber Inc, which offers its services to around 1,200 cab operators in India''s 10 top cities, has come under the scanner of the Services Tax Department.

 Most likely, the service tax notice to Uber is the first to a foreign service provider in the e-commerce space in the country, which is seeing an unprecedented growth of ecommerce at a CAGR of 35 to 40 percent.

All services in India attract service tax at the rate of 12 per cent unless it is included in a negative list or is exempted by the government. Taxi services fall in the ambit of service tax. Check out Service tax rules in India here. Rival taxi service player Ola Cabs has been paying service tax from the start.

On another note, to understand more about the action in this space, do read our article on " Why have investors poured over INR 600 crores into the taxi market?"

To gain more insights into the functioning of the taxi ecosystem in India, don't miss out the taxi Panel at TechSparks where we have Ola, TaxiforSure and Uber...Click here for more details.