Karnataka mulls 1-2% levy on aggregator platforms like Swiggy, Zomato, Uber

Government of Karnataka is planning to levy a fee of 1-2 per cent on aggregator platforms such as Swiggy, Zomato, Dunzo, Flipkart, Amazon, Uber, and others. The funds collected will be allocated to the Welfare Fund for gig workers. An announcement in this regard could be made after a sub-committee meeting scheduled in the next week.

According to reports quoting a source, the levy of such a fee is part of the state government’s draft notification on Platform-based Gig Workers (Social Security and Welfare) Bill, 2024. The draft bill says the state government will establish a fund to be called “The Karnataka Gig Workers Social Security and Welfare Fund”. For this a “Platform-based Gig Workers Welfare Fee” will be charged from aggregators.

The draft bill will encompass aggregators offering a range of services including ride-sharing, food and grocery delivery, logistics, e-marketplaces, professional services, healthcare, travel and hospitality, content, media services, and more. It says the welfare fee is to be submitted to the state government at the end of each quarter.

As soon as the bill is approved, the platforms will charge the fee and remit it directly to the welfare board. Although the companies will not gain from this adjustment, a minor cost increase of 1-2% may discourage customers from making frequent orders.

A consortium of prominent tech startups and unicorns has raised serious concerns about the proposed Bill. They have conveyed to the state government that the Bill, in its current state, could hinder business operations, complicate processes, and impose a heavier regulatory and compliance burden on the growing gig and startup economy.

The group submitted its concerns to the state government via several trade organizations, including the Confederation of Indian Industry (CII), the National Association of Software and Service Companies (Nasscom), and the Internet and Mobile Association of India (IAMAI).

Meanwhile, the labour department has reportedly confirmed that gig workers will not be subject to double taxation. Aggregators expressed objections, claiming that gig workers are already covered by the Union government's Code on Social Security, which includes a social security fund, backed by contributions from aggregators amounting to 1% to 2% of annual turnover, capped at 5% of payments to workers. Nonetheless, the Karnataka labour department insisted that there would be no tax duplication.