Karnataka to Introduce 1-2% Transaction Fee on Food and Ride-Share Apps

The Karnataka government is set to impose a new transaction fee on popular aggregator platforms like Zomato, Swiggy, Uber, and others. This move aims to support the welfare of gig workers in the state.

What You Need to Know About the New Fee

Karnataka’s Labour Minister, Santosh Lad, announced that a small cess—ranging from 1% to 2%—will be charged on every transaction made through these platforms. The funds collected will go towards the Karnataka Gig Workers Social Security and Welfare Fund, which is designed to provide support and benefits for gig workers, who often lack traditional employment protections.

Who Will Be Affected?

This fee will apply to various aggregator services, including:

• Ride-sharing (e.g., Uber, Ola)
• Food delivery (e.g., Zomato, Swiggy)
• Grocery delivery (e.g., Dunzo, Zepto)
• Logistics and other professional services

The fee will not be charged on the products themselves but specifically on the transportation services offered by these platforms. Aggregators will be required to collect the fee and submit it to the state government quarterly.

Concerns from the Industry

While the bill is intended to support gig workers, it has sparked mixed reactions. Organizations like NASSCOM and IAMAI have raised concerns that the new fee could hurt aggregator businesses and affect the ease of doing business in Karnataka. They argue that the additional costs might discourage customers from frequently using these services.

On the other hand, groups like IFAT and the Vidhi Centre for Legal Policy have welcomed the initiative, seeing it as a positive step toward securing better welfare for gig workers.

No Double Taxation for Gig Workers

The Karnataka labour department has assured that there will be no double taxation for gig workers. Although aggregators are already contributing to a national social security fund, the state government insists this new fee will not duplicate those existing contributions.

Conclusion

As Karnataka moves forward with this new transaction fee, the balance between supporting gig workers and maintaining the viability of aggregator platforms remains a hot topic. The bill aims to establish a framework that protects gig workers while addressing concerns from the industry. As these developments unfold, it will be interesting to see how both workers and companies adapt to the changes.