What is subscription service by Ola, Uber? Who will benefit?

Popular among people, the ride-hailing giants Ola and Uber have acknowledged a new strategy that is quite similar to Namma Yatri and Rapido. The company has announced subscription-based plans for auto drivers instead of charging on booking fee or commission on every transaction.

The subscription plan has been launched across key markets, including Delhi-NCR, Mumbai, Bengaluru and Hyderabad by Ola. On the other hand, a similar program was launched by Uber in six cities, commencing with Chennai, Kochi and Visakhapatnam, a few weeks ago.

According to those aware of the developments, Ola and Uber may be able to avoid paying the 5% goods and services tax (GST) on auto-rickshaw rides they facilitate by launching subscription-based plans, in which the platforms charge driver partners on their platforms a fixed daily or weekly fee for an unlimited number of rides.

However, tax experts said due to a lack of clarity could lead to potential disputes between operators and tax authorities.

Traditionally, both ride companies follow a commission-based revenue model where the platform keeps a share of the fare for every ride as a commission or booking fee and passes on the rest to driver partners.

Other the other hand, under the subscription model, the platform charges on a daily or weekly basis. The two major differences that can be seen are that Ola and Uber do not allow online payments and also don’t set the price for these rides.