Faulty algorithms of Uber & Ola collecting fake 'taxes' from passengers in Delhi-NCR

However the fare collected in the name of taxes is never deposited with the UP government, simply because the state of Uttar Pradesh never charges its own cabs upon re-entry!

“We don’t charge our own home state cabs per entry if they are entering Uttar Pradesh from nearby states including in Delhi and Haryana. If anyone is collecting any amount in the name of taxes as charged by UP state, he or she is violating the law,” said Ms Indira Singh, secretary, state transport authority and deputy transport commissioner in the State of Uttar Pradesh.

Uber did not specifically comment on why customers are charged with Rs 100 tax while travelling in a UP registered cab which is plying back to home state.

The company instead said that it collects a tax for a non-UP vehicle under the head ‘surcharge’ in the bills generated to customers.

“The tax collected by UP of Rs 130, with a 24-hour validity for a non-UP vehicle is computed as a surcharge of Rs. 100 by Uber,” an Uber spokesperson responded.

Moneycontrol ratified the claim with drivers registered with online taxi aggregators. “In case, if the number plate of the cab is of UP, then the driver will not have to pay Rs 120 per day (plus Rs 10-50 as bribe) while entering into UP, instead he pays a yearly road tax of around Rs 6000 which a driver has to pay anyways to keep the cab on the road,” said a driver requesting anonymity as he has been driving with Uber since it launched operations in Delhi NCR.

How faulty algorithms ‘tax’ customers

But why does Uber levy this ‘tax’ even when a UP-registered cab is allotted to a customer located in Delhi or Gurgaon and traveling towards Ghaziabad or Noida?

The answer lies in the inadequacy of the algorithms of online taxi aggregators that do not take into account the registration plate of the cab before calculating the fare.

Thus customers are shelling Rs 100 extra as ‘tax’ even when the state of UP does not collect any entry tax on its own cabs.

“Uber's algorithm computes the fare basis the pickup and drop-off location before the trip is dispatched to a vehicle. It does not take the vehicle number into consideration before computing the fare,” an Uber spokesperson admitted.

Drivers of Uber and Ola walk next to their parked vehicle's during a protest in New Delhi, India, February 14, 2017. REUTERS

Does Ola algorithm also follow a similar pattern of levying surcharges in names of taxes, even when the state does not levy?

Ola sent us a standard answer in response to a questionnaire.

"All rides at the Ola platform comply with the tax structures specified by the respective state governments. The invoice shared with the customer, once the ride is concluded, gives a detailed break-up of the charges levied," Ola spokesperson said in a statement to Moneycontrol.

Companies evade questions on UP bound passengers…

There is another catch in the levying of taxes on passengers. A cab driver is levied the Rs 120 just once in 24 hours if his cab is registered outside UP.

This fare is collected from the passenger in the form of Rs 100 ‘surcharge’ when they travel to Noida or Ghaziabad.

However if a driver gets more than one trip to UP, Uber still levies a surcharge of Rs 100 on the second, third or fourth passenger, even when the state government is not collecting any further taxes in a 24 hour period on a non-state cab.

“The Municipal Corporation of Delhi charges toll every time a vehicle enters Delhi and Uber includes this toll in upfront fare, as soon as a rider enters pick-up and drop-off locations that necessitate crossing state borders to enter Delhi,” an Uber spokesperson said without commenting on the case of Uttar Pradesh.

We asked Uber why does the fare not go down once a home state numbered cab is allotted to a customer sitting in Delhi.

The company said that the tax collected by Haryana when vehicles enter the state is not included in the fare Uber charges from its riders.

Experts say that the ideal way should be that the drivers take monthly permits and then the companies can divide the tax among all the customers.

"The second thing could be that -- if you are doing a first trip you can deduct a charge from the customer but if you making a second or a third trip and if it is not incurred by you, then you should not charge the customer," added Jaspal Singh, an auto industry analyst and co-founder of Valoriser Consultants.

Uber and Ola evaded the question on home state cabs plying towards Uttar Pradesh from Delhi or Gurgaon.