GST on Taxi Services: Applicability and Rate Breakdown

If you’ve ever taken a cab or run a taxi business, you’ve probably wondered how GST affects the fare. This guide breaks down everything about GST on taxi services—when it applies, what the rates are, and how it affects both passengers and service providers.

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    GST Rates

    What is the GST on Taxi Services?

    The GST system in India applies to most transportation services, and yes, that includes taxis. But the rate depends on how the service is offered and whether it’s booked through an online platform or offline.

    GST Rate on Taxi Services

    Service Type GST Rate Input Tax Credit (ITC)
    Taxi service (offline operator, non-AC) Exempt (0%) No
    Taxi service (AC or radio taxi, offline) 5% No
    Taxi booked through online platforms (Uber, Ola) 5% No
    Rent-a-cab service (with operator) 5% or 12%* 5% without ITC / 12% with ITC

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    What is the GST Rate on Taxi Bookings from Aggregators?

    Online taxi aggregators like Uber and Ola are now required to collect GST from passengers. This rule ensures that digital platforms are treated like traditional operators under GST.

    • GST on taxi services through these apps is 5%
    • Passengers see the GST added to their final fare
    • Drivers do not need to register for GST if their annual turnover is below ₹20 lakh

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    GST Compliance for Taxi Operators

    • If you choose 5% GST, you can’t claim Input Tax Credit.
    • If you opt for 12%, you can claim ITC on vehicles, fuel, maintenance, etc.
    • If you offer services to aggregators (like Uber/Ola), they’ll handle GST collection, but you still need to maintain records.

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    When Taxi Services Are Exempt from GST

    Some basic taxi services are exempt under GST. These include:

    • Non-air-conditioned taxis
    • Manually hired taxis not booked through apps
    • Services provided by individuals below the GST threshold

    In such cases, the GST rate on taxi is 0%, which means passengers don’t pay any GST at all.

    Impact on Consumers and Drivers

    • For Consumers: Expect 5% GST on most app-based rides. Offline, non-AC rides may be cheaper due to exemption.
    • For Drivers: Small operators can avoid registration if below threshold. Those working with aggregators are auto-covered under GST even without their own registration.

    Whether you’re a rider or a taxi owner, knowing the GST rate on taxi services ensures you’re not overcharged and helps taxi businesses stay compliant.

    Frequently Asked Questions (FAQs)

    • What is the GST rate on taxi services?
      Taxi GST rate is 5% for most online and AC-based bookings. Non-AC taxis may be exempt.
    • Is GST applicable on Ola and Uber rides?
      Yes, GST on taxi services booked via apps like Ola or Uber is 5%.
    • Can taxi operators claim Input Tax Credit?
      Only if they opt for the 12% GST rate. The 5% option doesn’t allow ITC.
    • Are there any exemptions for GST on taxi?
      Yes, non-AC taxis and small operators earning below ₹20 lakh per year are exempt.
    • Does the passenger need to pay GST separately?
      No, GST is included in the fare and handled by the operator or aggregator.
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