Pathao, InDrive Riders to Pay 5% VAT on Earnings from Friday

Ride-hailing riders working with apps like Pathao and InDrive will now have to pay VAT on their earnings, after the Inland Revenue Department rolled out a new tax provision starting Friday. Every transaction a rider completes through these platforms will attract a 5 percent Value Added Tax.

Where This Comes From

The change traces back to an amendment under the Economic Act 2083. The tax status of digital ride-sharing platforms had stayed unsettled for a long time, and the department has now moved to pull the sector into a formal tax structure.

Who Actually Collects It

The responsibility for collecting the VAT does not fall on individual riders directly — it sits with the platform.

• The platform must deduct 5 percent from each transaction at source
• Collected VAT must be deposited with the concerned revenue office by the 25th of the following month
• Platforms are required to issue a tax invoice for every transaction

Not Counted as Platform Income

The department has been specific on one point: the amount collected on behalf of riders, along with its invoice, will not be treated as the platform’s own revenue. Platforms also get no tax deduction benefit on this collected sum. The money simply passes through their hands — it doesn’t become part of their income.

Commission Still Taxed at 13 Percent

Separately, whatever commission or service fee the platform charges riders will continue to carry the existing 13 percent VAT, unchanged from before. That effectively creates two tax layers running side by side in the ride-sharing business — 5 percent on the rider’s transaction, and 13 percent on the platform’s commission.

PAN Now Mandatory for Riders

There’s a new condition for riders too. Anyone wanting to offer rides through these platforms must now hold a Permanent Account Number, or PAN. The department has, however, offered some relief alongside this — riders themselves will not be required to register separately for VAT.

What It Means Going Forward

Taken together, the move fits into the government’s ongoing push to bring the ride-sharing sector into the formal tax net, giving it more visibility over revenue generated through digital platforms. What it does to riders’ actual take-home earnings, though, is something that will only become clear over time.