Karnataka government fixes 5% service fee for mobile app-based auto services

The Transport Department has fixed the fee after holding consultations with various stakeholders. 
| Photo Credit: file photo

The Transport Department on Friday (November 25) issued a notification fixing the service fee for auto services provided by the mobile app-based taxi aggregators such as Ola, Uber and Rapido. It says the aggregators can collect from users a service fee of 5% of the auto fare fixed by the authorities, and the applicable GST.

Officials say at present, aggregators charge 15% as service fee (including 5% GST) as per the Karnataka High Court’s direction. With the fixing of service fee, the fare will come down.

Transport Secretary N.V. Prasad said, “The service fee has been fixed as per the provisions available in the rules, and it is applicable with immediate effect. Taxi aggregators have to follow the rules on collecting the service fee from the passengers.”

In 2021, for Bengaluru city, the Regional Transport Authority had fixed a basic fare of ₹30 for the first 2 km and ₹15 thereafter for every km. 

The notification issued on Friday states that directions have been given to regional transport authorities (headed by the deputy commissioners) to consider service fee and GST while fixing the auto fares.

Meeting with stakeholders

The Transport Department has fixed the fee after holding consultations with various stakeholders such as taxi aggregators, auto driver unions, and the general public as per the directions of the Karnataka High Court.

In the first week of October, the department had directed taxi aggregators to stop auto services after receiving complaints against them of charging exorbitant fares. Aggregators were accused of charging a base fare of ₹100 for 2 km. The aggregators had challenged the order in the Karnataka High Court. The court had allowed it to collect 15% (including 5% GST) as user fee for providing the auto services.

Mixed reaction

The State government’s move is likely to make taxi aggregators see red. Sources within the aggregators said that a service fee of 5% is not sustainable for them.

An Uber spokesperson said, “We are yet to see the government proposal. But as we have mentioned earlier, any commission constraints should be financially sustainable to run operations. If our costs cannot be covered through commissions, we will have to find ways to offload costs that could impact the experience of drivers and riders.” During the consultation meeting, the aggregators had demanded a user fee of 20% to 25%.

Some commuters who use the app-based auto services said a service of 5% of the auto fare is reasonable. “It is good that the State government has finally fixed the service fee. The service fee of 5% and applicable GST appears to be affordable for the users. We hope that aggregators follow the new rule,” said Sridhara Murthy, a regular commuter.

During the consultation meeting with the general public, many had also urged the State government to come out with its own mobile app that protects the interest of the passengers as well as drivers.