The Karnataka government is planning to impose additional cess on every transaction on aggregators platforms like Zomato, Dunzo, Swiggy, Zepto, Ola and others. Karnataka Labour Minister Santosh Lad said the funds collected will be allocated to the Welfare Fund for Gig workers.
Karnataka Labour Minister Santosh said: “The Labour department of Karnataka has decided to impose cess on every transaction on aggregators platforms like Zomato, Dunzo, Swiggy, Zepto, Ola and others such. The Money which will be collected will be used for the Welfare fund for Gig workers. We are not charging for products or goods which consumers purchase, wit will be charged only on transport.”
The state government’s draft notification for the Platform-based Gig Workers (Social Security and Welfare) Bill, 2024 includes the implementation of a fee. This fee, referred to as the “Platform-based Gig Workers Welfare Fee”, will be levied on aggregators in order to establish “The Karnataka Gig Workers Social Security and Welfare Fund”.
The 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. According to the draft Bill, aggregators are required to submit the welfare fee to the state government at the end of each quarter.
Once the bill is approved, the platforms will collect the fee and transfer it directly to the welfare board. Although the companies will not profit from this change, customers may be discouraged from placing frequent orders due to a small increase in costs ranging from 1-2%.
Earlier, NASSCOM had raised concerns about certain provisions in the gig workers’ bill, noting that they could have a negative impact on aggregator businesses. IAMAI also expressed their reservations regarding the draft law, citing potential obstacles to business operations and the state’s ease of doing business ranking. Contrarily, IFAT and Vidhi Centre for Legal Policy, along with other Unions, welcomed the bill.
The labour department clarified that there would be no double taxation for gig workers. Aggregators had objected to the department’s decision, arguing that gig workers are already covered under the Union government’s Code on Social Security, which includes a social security fund funded by aggregator contributions ranging from 1% to 2% of annual turnover, with a cap at 5% of payments to workers. Despite this, the Karnataka labour department maintained that there would be no duplication of taxes.
