Karnataka ARR May Revoke GST Exemption for Namma Yatri’s Zero-Commission Model
GST Relief for Ride-Hailing App Faces Reassessment Amid Regulatory Scrutiny
Karnataka’s Authority for Advance Ruling (ARR) is reportedly reviewing its previous GST exemption for ride-hailing platform Namma Yatri, potentially reversing a landmark ruling that allowed the startup to operate under a zero-commission, subscription-based model without GST liability.
Regulatory Reassessment and Notices
- The ARR has sent notices to both Namma Yatri’s parent company Moving Tech Innovations and its major stakeholder Juspay, inviting them to present their case if they wish to contest the possible revocation.
- This follows the authority’s observation that Juspay acquired Namma Yatri as a “going concern” and may have been responsible for the platform during the period in question.
Background: From GST Exemption to Possible Reversal
- In September 2023, Karnataka ARR granted GST exemption to Namma Yatri because of its subscription model. Unlike traditional commission-based platforms, drivers pay a fixed fee to use the SaaS platform, allowing them to keep 100% of their earnings.
- The company was spun off in November 2023 by Juspay to create a more independent entity, Moving Tech Innovations, which operates Namma Yatri and other mobility apps.
Expansion and Industry Impact
- Namma Yatri, launched in 2022 by Juspay in collaboration with Nandan Nilekani’s BECKN Foundation and supported by the Auto Rickshaw Drivers’ Union (ARDU), has expanded from Bengaluru to cities like Kochi, Mysuru, Tumakuru, and Kolkata (as Yatri Saathi).
- The app also supports metro bookings in Chennai and, since August 2024, a zero-commission cab service in Delhi under “Yatri” via the Open Network for Digital Commerce (ONDC).
The Changing Ride-Hailing Landscape
- The zero-commission model, pioneered by Namma Yatri and Rapido, has been favored by drivers for higher earnings and transparency, as they only pay a fixed subscription fee.
- Traditional ride-hailing giants like Ola and Uber have faced protests and strikes over commission fees and have started transitioning to similar subscription models, with Uber moving to zero-commission for auto drivers in 2025.
- Tax incentives are a significant reason for the shift. While Namma Yatri’s subscription model previously qualified for GST exemption, platforms like Ola used to pay 5% GST on commission income.
Future Outlook: Implications for Zero-Commission Platforms
If the ARR reverses the GST exemption, it could reshape the economics of zero-commission ride-hailing models, impacting platform operators and driver earnings alike. The ruling may also set a precedent for regulatory policy as India’s mobility sector continues to evolve, balancing driver interests, tech innovation, and tax compliance.
