Karnataka HC maintains 5% service charge cap on app-based autos

The Karnataka High Court on Monday dismissed the writ petitions filed by ride hailing companies against capping the service charge levied at 5% in the state.

The petitions challenged the state government’s notification fixing the service charge collected by companies such as Uber, Ola and Rapido for auto rickshaw rides.

According to a Bar and Bench report, the court clarified that the aggregators would be entitled to collect 5% service charge as per the notification.

"The writ petitions stand dismissed. It is, however, made clear that the aggregators would be entitled to collect 5% service charges as per the impugned notification now upheld over and above the fare fixed," the court said in its order.

In a statement to the media, Karnataka’s transport minister R Ramalinga Reddy said the judgment would benefit thousands of citizens of Bengaluru who rely on autos for their daily commute.

In November 2022, the Karnataka transport department had put a cap on service charges for app-based auto rickshaw bookings at 5% with applicable GST on the base fare.

However, ride hailing firms including Uber, Ola and Rapido had challenged the move. Citing motor vehicle aggregator guidelines, these firms argued that it permits them to charge a commission of 20% along with a surge price of up to double the base fare. In January 2023, the Karnataka High Court stayed the notification and permitted them to operate temporarily while charging a 10% convenience fee.