Pune: Consumers may soon have to start shelling out a little extra on transportation as the cost of commuting by private buses and rental cars is likely to rise under the Goods and Services Tax (GST) regime.
With an increase in tax and unavailability of set-offs, transportation operators may be forced to hike prices as the last resort.
Chairman and Managing Director of Prasanna Purple Mobility Solutions Pvt Ltd, Prasanna Patwardhan said, “The transportation sector will certainly be hit under the GST regime, as this sector does not have an input credit available. Apart from that, while renting a car, there are multiple levels of persons involved and the tax of five per cent, which has been levied on renting of cabs only multiplies.”
He said the tax for commission agents which work in the sector has been set at 18 per cent. “With multiple layers of tax on renting and the commission agents, we hardly get any benefits. There is no compensation and so the cost will increase for us, which may be passed on to the consumer,” Patwardhan said. He said the operators bear many other small expenses, all of which only adds to their costs, as there is no input available against them.He added there are many ambiguities that they have come across, with regard to the tax rates.
“The tax on car rentals is five per cent but that on bus rentals in 18 per cent. Shouldn’t it be the other way round as a bus can transport more people from one point to the other? Many such doubts have arisen since we started studying the new tax regime. We have been sending queries, seeking clarification on the matters,” he said.
Patwardhan said that in this month, the operators will try to understand how the costs are affected by GST. “After we see the changes in costing during this month, we will decide on the prices. However, if no changes are made in the tax rates, the cost of transportation is set to rise,” he stated.