Karnataka government may introduce fee on online transactions to fund gig workers’ welfare

The additional levy may seem small — ₹1 to ₹5 per transaction — but could add up quickly, changing the way people spend online.

ByMahesh M Goudar

Published Jul 04, 2024 | 11:00 AM Updated Jul 04, 2024 | 11:00 AM

Congress MP Rahul Gandhi during his interaction with gig workers in Bengaluru before Karnataka polls. (X/INCIndia)

The Karnataka government is likely to introduce a new welfare fee or additional tax charges on every digital transaction, a move that will increase the cost of all online shopping, food deliveries, and ride-hailing services.

The additional levy, aimed at funding the welfare of gig workers, may seem small — ₹1 to ₹5 per transaction — but could add up quickly, changing the way people spend online.

This new charge is likely to be added to the bills of online transactions, making them a bit more expensive.

In the first draft of the Karnataka Platform Based Gig Workers (Social Security and Welfare) Act, 2024 Bill, the government rolled out a revenue model for the gig workers welfare board.

The higher officials at the Department of Labour stated that the government is still working out the revenue model to fund the welfare programmes for the gig workers community. The government has also held talks with aggregators including Swiggy, Zomato, Flipkart and Amazon.

It may also be noted that Chief Minister Siddaramaiah already announced insurance cover of ₹4 lakh for each gig worker in Karnataka.

Also Read: Karnataka’s labour law exemption to IT, ITES firms gets pushback

Exploring possible revenue stream

The Karnataka government is exploring possible revenue streams to fund the welfare of gig workers, a growing segment of the workforce.

According to Department of Labour Principal Secretary (PS) Mohammad Mohsin, the government is currently refining the revenue model, with initial discussions suggesting a levy of ₹1 to ₹5 per transaction on online platforms such as Swiggy, Zomato, Blinkit, Flipkart and Amazon.

“We are still working out the revenue model for the proposed gig workers welfare board. We have held meetings with the aggregators and online platforms on levying welfare fees,” Mohsin told South First.

“The deliberations are still underway whether to impose a welfare fee or additional tax charges for every transaction the consumer makes on the online platforms,” he added.

“We are also thinking about collecting a certain sum, which will be a minimal fee, either from the aggregators or gig workers themselves. Because the welfare program is aimed at the gig workers,” Moshin said hinting that the state government is likely to impose either welfare fee or additional tax charges on every transaction.

When asked how much revenue the department was expecting to generate through this mode, he said: “The talks are still in the early stage. The department has just released the draft of the Bill and called for the objections.”

“As per the initial talks, the welfare fee or the additional tax charges are most likely to be between ₹1 to ₹5 per transaction. I will make it clear it is not the final charge,” Mohsin said.

“We are still working out on the revenue model. The final decision will be made after holding talks with all the stakeholders. The chief minister has already allocated ₹5 crore for the gig workers welfare,” Mohsin added concluding that there is no dearth of funds.

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Proposed funding model

As stipulated in the draft Bill, the fund will be fuelled by a multifaceted revenue stream, ensuring a stable and sustainable support system for gig economy workers.

At the heart of this funding model lies the “Platform Based Gig Workers Welfare Fee”, a dedicated levy imposed on aggregators, which will contribute a significant portion of the fund’s resources, the draft Bill said.

This fee will be calculated as a percentage of the gig worker’s pay in each transaction or based on the annual state-specific turnover, as notified by the state government.

Aggregators will be required to deposit the collected welfare fee on a quarterly basis, in a manner prescribed by the authorities. In addition to the welfare fee, the fund will receive contributions from individual platform-based gig workers.

Furthermore, the state and Union governments will provide grants-in-aid to support the fund’s objectives, while donations, gifts, and bequests from various sources will also be accepted.

The Karnataka Gig Worker’s Social Security and Welfare Fund will be managed and utilised in a manner prescribed by the government, with the sole objective of providing social security and welfare benefits to registered gig workers, it said.

Also Read: New criminal laws leave Karnataka government, advocates fuming

Government to monitor online payment

In a bid to enhance transparency and accountability in the gig economy, the state government has proposed the implementation of a Central Transaction Information and Management System (CTIMS).

This proposed CTIMS system aims to track and monitor all payments generated on platforms, including those made to gig workers and the welfare fee deducted.

The CTIMS will be administered by the state government and monitored by the Board and will serve as a central repository for all transactions related to platform-based gig workers.

Every payment made to gig workers and welfare fee deducted will be recorded on the system, ensuring that all transactions are traceable and accountable.

Furthermore, the CTIMS will provide transparency on the utilisation of the welfare fee, with details of the amount collected and spent at the gig worker level readily available on the system.

(Edited by Muhammed Fazil)

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