A step forward, but not far enough, Pg 10.

Key Highlights:

• Ordinance imposes 1–5% cess on gig workers’ payouts per transaction.
• Likely application of lower 1% rate, mirroring other welfare cesses like in construction.
• Centre’s Code on Social Security mandates 1–2% cess on turnover, a broader base.
• Example from Zomato’s 2024 financials shows payout-based cess yields lesser revenue.
• Subscription-based models like Namma Yatri report zero payout, possibly excluding them from cess applicability.
• Suggested alternative: cess charged on total transaction amount, not payout.
• Platforms expected to transfer cess via dedicated portals without burdening customers.

Detailed Insights:

• Cess on payout results in significantly lower contributions than cess on turnover, especially for platforms diversifying into other revenue streams.
• Zomato’s payout-based cess (2%) would be less than 1% of its turnover, showing fiscal inadequacy in ensuring gig workers’ welfare.
• Subscription models disrupt the link between platforms’ financials and worker compensation, creating a loophole in cess applicability.
• Drivers under such models may be excluded from social security benefits unless cess is tied to transaction value instead.
• A digital cess transfer portal, as proposed in the Bill, can streamline cess collection and prevent evasion.
• The approach must account for sector-specific dynamics; a one-size-fits-all cess rate could worsen inequities.
• The economic burden on consumers is minimal—only ₹0.50 added to a ₹100 bill at 5% payout cess.

Concepts Involved:

• Payout: Final payment made to gig workers after commissions and deductions.
• Turnover: Total revenue generated by a company from all sources.
• Subscription Model: Platform monetization model where workers pay a flat fee, leading to zero recorded platform payouts.
• Cess: A tax earmarked for a specific purpose, in this case, gig worker welfare.