GSTN for Gig Workers on Government’s Agenda

The Gig Economy service professionals in India are soon likely to officially fall under the purview of the Goods & Services Tax (GST) Network, per the Department for Promotion of Industry and Internal Trade (DPIIT). Doing so would entail placing online platforms such as UrbanClap, UBER, Ola, Zomato, BigBasket, etc. under the obligation to employ only such service professionals (gig workers) who have acquired a GST Number or GSTIN.

Intending to maintain a database of gig economy professionals in an organised format, the government is addressing much larger concerns that committed gig economy service professionals and the stakeholders have been voicing since long all over the nation (even internationally) – i.e., accessing the provisions of availing gratuity perks, consumer safety (ensured via gig workers’ tracing, and credential and qualification database), safeguarding workers’ rights, health and maternity benefits for gig workers, life and disability cover, old age protection, and the extension of Employees’ State Insurance Corporation (ESIC) workers’ benefits to gig workers.

This promising initiative is formulated under the auspices of the Social Security Code Bill (“the Bill”) that received approval from the Union Cabinet in December 2019. The Bill recommends formation of a social security fund via a corpus presented under the corporate social responsibility (CSR) framework.

The government, in its efforts to legitimise the gig economy and protect its workforce, is following the footsteps of other developed nations having already introduced GST liabilities to their independent workers. These include, for example, Canada and Australia, wherein, the former makes it mandatory for independent contractors to have to pay GST/HST (Goods and Services Tax / Harmonised Sales Tax) if earning above $30,000 per year; in the case of the latter, earning over $75,000 attracts the liability to pay GST. Apart from this, in Australia, those offering ride-sharing services are required to acquire an ABN and also register for GST irrespective of their income, per the mandate given by the Australian Taxation Office (ATO).

Formalisation of the gig economy in itself has also emerged as a promising forte as startups like HelloVerify now offer artificial intelligence and machine learning (AI & ML) powered gig workers’ screening services. Here, it’s worth noting that the nature of services offered by HelloVerify, complement the objective that the government of India is striving to achieve in its efforts to maintain a central database of gig workers’ credentials and informational particulars.