Public Notice Relating to Value Added Tax on Ride-Sharing Services, 2083

The Finance Act, 2083, by adding sub-section (1kha) to Section 7 of the Value Added Tax Act, 2052, has made a provision concerning the collection of Value Added Tax by a person operating a resident ride-sharing service (Ride-Sharing Operator) at the time of the transaction carried out by a person who, being affiliated to a platform operated by such operator, provides transportation and delivery services. As it is desirable to simplify this provision and make it procedurally convenient, clear, transparent, and predictable, so as to ensure compliance with tax laws and tax participation, the Inland Revenue Department, by a decision dated 2083/03/31, resolved to issue the "Public Notice Relating to Value Added Tax on Ride-Sharing Services, 2083". Accordingly, this notice is published for the information of all concerned stakeholders.

The Finance Act, 2083, by adding sub-section (1kha) to Section 7 of the Value Added Tax Act, 2052, has made provision that, at the time of the transaction carried out by a person who, being affiliated to a platform operated by a person operating a resident ride-sharing service (Ride-Sharing Operator), provides transportation and delivery services, the person operating the ride-sharing service shall assess and collect tax at the rate of five percent on the taxable value in accordance with this Act and the Rules framed under this Act. On the basis of the aforesaid provision, the person operating the ride-sharing service and the person providing transportation and delivery services (the Rider) shall, in respect of their transactions, act as follows.

Particulars:

1. The person operating the ride-sharing service through the platform (Ride-Sharing Operator) must be registered for Value Added Tax.

2. On behalf of the Rider who, being affiliated to its platform, provides transportation and delivery services, Value Added Tax shall be collected at the rate of five percent on the charge received for such service.

3. In respect of the transaction of such service, a tax invoice shall be issued on behalf of the Rider in the format set out in Section (Ka) of the Schedule. However, the income under such invoice shall not belong to the platform.

4. The aforesaid tax collected on behalf of the Rider, together with the statement, shall be deposited by the platform at the concerned office within the twenty-fifth day of the following month.

5. The platform shall not be entitled to claim tax deduction (Input Tax Credit) on the tax collected and deposited on behalf of the Rider.

6. Except as provided above, in respect of the platform's own regular transactions, tax compliance shall be made in accordance with the Value Added Tax Act, 2052, and the Rules, 2053.

7. When the platform receives service charges including commission from the Rider, and in respect of its other regular transactions, Value Added Tax shall be collected at the rate of thirteen percent. For that purpose, a tax invoice shall be issued in the format set out in Section (Kha) of the Schedule.

8. The Rider who, being affiliated to the platform, provides transportation and delivery services must compulsorily obtain a Permanent Account Number (PAN). However, registration for Value Added Tax is not compulsory.

Schedule

Section (Ka)

Format of Tax Invoice

(Tax invoice issued by the ride service provider on behalf of the Rider)

Name of Platform: Transaction Date:

Permanent Account No.: Invoice No.:

Name of Customer: Trip / Transport Details:

Name of Rider: Permanent Account No.:

Section (Kha)

Format of Tax Invoice

(Format of the invoice issued by the platform in its regular business)

Name of Platform: Transaction Date:

Permanent Account No.: Invoice No.:

Name of Buyer: Permanent Account No.: