Extending India's Goods and Services Tax (GST) to subscription-based ride-hailing platforms could trigger a significant contraction in driver participation and passenger demand, according to a new report by the Esya Centre.
The study highlights that platforms such as Rapido and Bharat Taxi, which currently operate under a different tax structure, face potential margin compression if brought under the standard GST regime.
The core concern is that the additional tax burden may not be fully passed on to consumers without reducing ride volumes.
Instead, drivers—who operate on thin margins—may see their net earnings decline, prompting some to exit the platform or reduce their active hours.
This supply-side shock could lead to longer wait times and higher effective costs for users, potentially stifling the growth of the subscription model that has gained traction in India's two-wheeler and auto-rickshaw segments.
This development adds to the regulatory uncertainty facing India's gig economy.