Exclusive: Now, Uber Pilots Zero Commission Model For Cab Drivers

After Rapido and Ola, ride hailing major Uber has now extended its software-as-a-service (SaaS)-based zero commission model to cab drivers. 

Uber’s driver app now features a ‘Driver Pass’ option, allowing drivers to buy multi-day subscriptions.

Earlier this week, the feature was piloted by Uber in Delhi NCR, with conditions mandating cab drivers to buy a driver pass to continue services via its app.

The company’s app shows that drivers can opt for a pass for either 24 or 72 hours. The 72-hour pass is priced at INR 341, including 18% GST.

“We’ve been running Uber Auto on a subscription model across India since last year, and continue to test it across various product categories in different cities,” an Uber spokesperson said.

Uber further claims that no commission is charged once a driver purchases the pass. During the initial three-day trial, the company has waived the pass amount.

“Commission may vary on each trip but will always be 0% at the end of the week,” reads Uber’s driver app.

The development comes on the back of Uber’s competitor Ola recently rolling out a software-as-a-service (SaaS)-based zero commission model for its cab drivers. Notably, Rapido had first mover advantage as it rolled out this model back in 2023. This made cab drivers more inclined towards using Rapido, resulting in its competitors losing market share.

Uber is actively looking to expand its services in India. The company recently forayed into the motorhome space in India with the launch of a limited-period Intercity Motorhomes. It also expanded its Intercity service to cover 3,000 routes across the country.

How The Zero-Commission Model Is Changing The Game

Earlier, Ola and Uber used to operate on a commission-based model, where drivers were charged commission on every ride they completed. The commission rate was as high as 15-20% per ride. 

On the other hand, a subscription-based model facilitates a driver to keep 100% of their ride fare. In return, they need to purchase a weekly or monthly subscription of that particular ride hailing service. 

The subscription model addresses the long standing complaints of drivers that they end up losing a significant part of their earnings from each ride due to commissions.

While Rapido has been operating on this model since 2023, Uber and Ola imitated it. 

Last year, Ola rolled out a subscription-based model for its auto drivers. In June, several reports claimed that the company had expanded this model for its cab drivers. 

Joining the party earlier this year, Uber first introduced a subscription-based model for its auto drivers in India. 

Bumpy Tax Ride?

Although this model offers some respite to drivers, it also allows ride hailing giants to benefit from tax savings.

While platforms like Namma Yatri were exempted from the tax liability due to their model, Ola used to pay 5% GST on the commission income earned through drivers. 

Under a commission-based model, the company takes the complete fare from the passenger and gives a cut to the driver. In this case, it is considered as an ecommerce platform, which is liable to pay 5% GST. 

However, even after having a subscription-based model, the Karnataka Authority for Advance Rulings (AAR) ruled that Rapido is liable to pay 5% GST due to its involvement in multiple services between drivers and passengers, making it an ecommerce platform. The company is fighting this claim legally.