FAQs: Change in Uber’s business model
Uber is going to change its operating model. Until now, the Uber service fee was charged to the driver as a part of the total fare (which was charged by the driver to the rider) and was paid by the driver to Uber from such total fare. With the change in operating model, Uber will directly charge the Uber service fee to the Company or the authorised users (in accordance with our existing arrangement), rather than charging it to the driver.
Thus, under the new model, the Company or your authorised users, as the case may be, will receive two services for each trip;
(a) passenger transportation services from the drivers; and
(b) technology and facilitation support services from Uber.
GST as applicable shall be charged extra.
Uber would revise its terms with you to reflect these changes. The updated terms will be effective for identified cities as per the dates mentioned in the terms. From the relevant effective dates, the above updated terms will prevail over the existing terms and / or any other agreement executed between Uber and the Company with respect to Uber’s services.
2. Is there any requirement to enter a new Agreement with Uber post this change in business model?
The existing agreements, terms and addendums between Uber and your Company would be amended. This includes:
- Online terms
- Revised addendums (for Travel, Central Product, Voucher etc)
The updated terms will be effective for identified cities as per the dates mentioned in the terms. From the relevant effective dates, the above updated terms will prevail over the existing terms and / or any other agreement executed between Uber and the Company with respect to our services.
3. What changes are made to the terms?
The Uber service fee was charged to the driver as a part of the total fare (which was charged by the driver to the rider) and was paid by the driver to Uber from such total fare.
With the change in operating model, Uber will directly charge the Uber service fee to the Company or the authorised users (in accordance with our existing arrangement), rather than charging it to the driver.
The online terms have been modified to reflect the understanding that Uber will charge its service fee to the Company or the authorised users.
4. What will change for us?
- Uber would issue 2 invoices for each trip to the Company or the authorised user
- For transportation services on behalf of the driver;
- For Uber Service Fees.
- GST will be charged respectively for the 2 invoices. The rates specified below are as per the current GST rate specified by Govt.
- 5% GST for the transportation services
- 18% GST for Uber Service Fees
- For Uber service fees, Uber will issue e-invoice to the Company. The e-invoice will be added to your Company Uber Dashboard;
- Post the completion of every monthly billing cycle, Uber will file its GSTR 1 returns which includes all the Uber service fee invoices. Where the Company is eligible to claim GST credit, it may do so based on the GSTR2A it receives from the Govt. GST portal.
5. What will not change?
- No change to the rider experience
- No change in support provided by Uber to riders or Company
- Transportation services would continue to be provided by the drivers
- The invoice for transport fare issued by Uber on behalf of the driver will continue to be a pdf invoice which will be added to your Company Uber Dashboard
- Where the Company has opted for ‘centralized billing’, the Company would continue to discharge the payment for transportation services and Uber Service Fees
- Where the company has opted for ‘decentralized billing’, the riders/employees/authorized persons would continue to make payment directly, post completion of the trip. The invoices shall be in the name of the rider.
- Uber does not provide transportation or logistics services or function as a transportation carrier. All such transportation or logistics services are provided by independent third party contractors who are not employed by Uber or any of its affiliates.
6. Will there be a change in method of invoicing & GST?
Two invoices per trip shall be issued with respective GST charges. The rates specified below are as per the current GST rate specified by Govt.
a. 5% GST for the transportation services
b. 18% GST for Uber Service Fees
7. Will Uber issue e-invoices?
Trip fare invoices issued by Uber on behalf of the driver for transportation service shall not be an e-invoice as per the GST laws.
However, Uber shall issue e-invoices for Uber Service Fees and report the same in its GST returns as per the GST regulations.
8. Will both the invoices be reported by Uber in the GST returns?
Yes, both the invoices will be reported separately by Uber in the GST returns filed by it.
The invoice for Uber’s Service Fees shall be reported as a B2B supply if the Company is registered under GST and the Company has shared its GST number with Uber.
As the driver continues to be the supplier of passenger transportation services, Uber will continue to deposit the GST on behalf of the drivers under section 9(5) of the GST Act and report these as B2C supplies in the GST returns filed by Uber.
9. How does it affect centralized customers and decentralized customers?
The changes described above shall apply to both centralized and decentralised customers. For centralised customers the payments shall be made by the Company. The riders shall continue to pay for decentralised customers.
10. Will there be any change in the bank account used for payment in respect of the monthly statements?
There will be no change in the current payment arrangement for the Company. The Company will continue to make payment to the existing bank account of Uber.
11. What would be the TDS implications on the convenience fee charged by Uber?
- With effect from October 1, 2020, Section 194-O has been made effective. As per the relevant rules and regulations, Uber shall be solely responsible for deducting TDS on the transportation services provided by drivers.
- You may deduct TDS on the Uber service fee as per the applicable provisions of Section 194 C on Income-tax Act, 1961.
12. Whether the Company would be able to claim credit of the GST @18% paid in respect of Uber Service Fee?
You are requested to confirm the eligibility of availing GST credits on invoices raised by Uber with your tax consultants. Uber shall provide you with a valid GST invoice and report the Uber Service Fee invoices in its GSTR 1 returns.
13. Is there a change to the CSV file?
There will be no change currently in the CSV file.
14. Sample invoice for reference
