Fair Taxation Urged for Ride-Hailing Sector in Upcoming Federal Budget

Calls are growing for the federal government to introduce a fair and progressive taxation framework for the ride-hailing sector in the upcoming fiscal budget. Amid the country’s growing urban population, a lack of adequate public transport, rising fuel costs, traffic congestion, and parking challenges, ride-hailing services have seen substantial growth in recent years.

Despite this progress, industry experts argue that the current uniform service tax is hindering further expansion. “It’s concerning that platforms charging drivers commissions as low as 10% are subjected to the same service tax rates as those taking up to 25%,” said Anton Ambrose, Head of Public Policy and Regulatory Affairs for inDrive in the Asia-Pacific region.

Ambrose proposed a tiered taxation model in the upcoming budget. “Platforms that charge less than 11% commission should be completely exempt from service tax,” he recommended. “Those with commission rates between 11% and 15% could be taxed at 5%, while platforms exceeding 15% commission should fall into the 15% or higher tax bracket.”

He emphasized that this structure would promote fairness for drivers and affordability for users. “Such revisions will not only make things fairer for drivers but will also lower costs for passengers – particularly low-income groups – ultimately driving up demand,” he explained. “That increased demand could, in turn, result in higher tax revenues for the government.”

Ambrose also urged the government to exempt ride-hailing services from General Sales Tax (GST), arguing they are essential rather than luxury services. “In a country like Pakistan, where public transport is limited and concerns around safety and convenience are widespread, ride-hailing has become a necessity – not a privilege,” he added.