Karnataka Government to impose cess on transactions made on aggregators platforms

Karnataka Government to impose cess on transactions made on aggregators platforms

Context:

The Labour department of the Karnataka Government is planning to impose additional cess on transactions made on aggregators platforms like Swiggy, Zomato, Ola, Dunzo, etc.

Relevance:
GS-03 (Economy)

Highlights:

  • The labour department highlighted that the money collected through cess shall be used for the Welfare fund for Gig Workers.
  • The department also clarified that the cess will be charged only on the transport and not on the products or the goods that the consumers purchase.
  • The draft notification for the Platform-based Gig Workers (Social Security and Welfare) Bill, 2024 will include the implementation of a fee, referred to as the “Platform-based Gig Workers Welfare Fee”, levied on aggregators in order to establish “The Karnataka Gig Workers Social Security and Welfare Fund”.
  • Once the bill is approved, the platforms will collect the fee ranging from (1-2%) and transfer it directly to the welfare board.

Who are Gig Workers?

  • Gig workers are individuals who engage in temporary, flexible jobs, often facilitated through digital platforms or apps.
  • These workers include app-based cab drivers, delivery personnel, freelancers, and other independent contractors who perform tasks on a project-by-project basis.
  • Gig work provides flexibility and independence but often lacks job security, benefits, and protections found in traditional employment.

Gig Economy’s Significance in India:

  • Blue and White-collar Contributions: The gig economy significantly contributes to both blue-collar and white-collar employment sectors.
  • Projected Economic Contribution: The gig economy’s potential to provide 90 million jobs in non-farm sectors and contribute 1.25% to the GDP is crucial in achieving India’s economic goals.
  • Government Initiatives: NITI Aayog’s report highlights the expected expansion of India’s gig workforce to 2.35 crore by 2029-30.

What is Cess?

  • A cess is a tax on tax.
  • It is generally used for a specific purpose. Example, cess on education.
  • Unlike Surcharge, Cess applies to all taxpayers.
  • One important feature of cess is that it is not a permanent revenue source for the Government. Once the purpose for which the cess is levied is completed, it is removed.