Radio taxi fares likely to go up

The fares of the radio taxis in the City are set to go up in the coming days with the Union budget proposing to impose service tax on them.

Even though most of the radio taxi operators in the City are maintaining that its too early to estimate the quantum of hike in the fares, in all the likelihood, the customers will have to shell out more for every ride. “The levy of service tax on radio taxis will have significant negative impact on the consumer and industry.”

“This increased tax burden will lead to a fare hike of Rs two to Rs three per km,” said a spokesperson for Meru Cabs, which operates around 4,000 cabs in the City. He said that the radio taxi industry was still in a nascent stage and struggling to make a decent return on capital invested.

 “Such increased tax burden will impact overall viability of the industry in the long term. This will also impact good quality supply as margins will get eroded,” he said, hoping that the finance ministry officials would reconsider the tax proposal.

Vilas Badrinath, General Manager, Mega Cabs, which operates 600-650 cabs in the City said that they were awaiting the government notification on the percentage of tax proposed to be imposed. 

“Nevertheless, it will not affect the fares. The service tax will be a separate component levied by the government and the customers will have to pay it,” he said.

However, OLA Cabs, which operates around 2,200 cabs in the City, will not be affected by the tax proposal, said Anand, director, Corporate Communication, OLA Cabs, “From Day One we have been remitting service tax since we are service providers.

With this, there could be some spillovers to us from other operators as the fares of radio taxi services are already on the higher side”.

 When contacted, a senior official of Karnataka State Tourism Development Corporation, one of the major radio taxi operators in the State, said that it was too early to comment as it was a policy issue and need to be understood thoroughly. “We will wait for government's notification in this regard,” he added.