Online housekeeping services have approached the government over 18 per cent GST, which according to them could kill the online firms, and asked to lower the tax rate.
“These service professionals (on their platforms) barely make Rs 5 lakh a month; the new rules make online marketplaces 18% more expensive than the offline world which is not correct. We should be brought on par with the offline players,” said Abhiraj Bhal, co-founder of UrbanClap, adding that they have made several representations to the government as they want housekeeping as a large organised sector, to ET.
He also asked the govt to tax online housekeeping services firms 5 percent instead of 18 percent.
Under rules applicable from August 22, 2017, housekeeping services need to pay GST at 18 per cent if the turnover on their platforms is more than Rs 20 lakh a year.
“There are no concessions envisaged in GST for startups or small service providers, except the threshold exemption of Rs 20 lakh which is common to all,” MS Mani, a partner at Deloitte India told ET.
Meanwhile, the GST Council is scheduled to meet on January 18, where it is expected to deliberate on the demand from the startup industry as well.
Internet startups that aggregate hotels and resorts also sought tax concessions for a longer period and easier compliance.
Tax experts said that the government can change the definition of composition dealers to include startups that provide services. Restaurants are the only service providers that are at present categorised as composition dealers.
In online housekeeping services, there are firms such as Zimmber, Urbanclap, Housejoy, and Timesaverz. In offline, there are close to 100 home services and local services firms in India providing plumbers, electricians, wedding photographers, fitness instructors, and tutors. These platforms work on the basis of commissions, charging anything between 10-30 per cent from service providers for every transaction.