Ride-hailing company Uber has launched a zero-commission model for auto drivers, allowing them to use the app as a software-as-a-service (SaaS) platform to connect with customers. This shift enables drivers to negotiate fares directly with riders and receive payments without platform interference.
With this change, fares will now be paid directly to the driver, and Uber will no longer have control over ride execution or quality.
“Fares shown in the app are suggested, but you and the driver partner may agree on a different amount,” a notification on the Uber app stated.
An Uber spokesperson added, “Given the industry’s shift towards a subscription-based model for drivers, we have decided to align our approach accordingly so as not to be at a competitive disadvantage.”
The move comes amid ongoing confusion over GST applicability on ride-hailing services. Both Uber and Ola had approached the finance ministry last year seeking clarity on the issue.
The tax treatment of ride-hailing platforms has been inconsistent. While Karnataka’s AAR ruled that Bengaluru-based Namma Yatri was not liable to pay GST on rides booked through its platform, Tamil Nadu’s tax authority held a contrary view. Later, Karnataka AAR ruled that Rapido was liable to pay GST on cab rides booked through its app.
Faced with regulatory uncertainty and driver protests over commissions, several companies are transitioning to the SaaS model. Rapido already offers this. Ola also piloted a zero-commission model in select cities for auto rides last year.
Uber and Ola have faced multiple driver strikes over commissions and fare structures. Earlier this month, auto and cab drivers in Chennai staged an indefinite boycott over high commissions. A similar strike occurred in Delhi-NCR in August 2023.
