Misclassification of Gig Workers with Respect to Taxation: Cross Jurisdiction Analysis of India & United States of America
Keywords:
Gig economy, Worker classification, Taxation policy, India–U.S. comparative analysis, Presumptive taxationAbstract
The rapid expansion of the gig economy has outpaced existing legal and tax frameworks, creating ambiguity around the classification and fiscal obligations of gig workers. This paper undertakes a cross-jurisdictional analysis of India and the United States, critically examining how the misclassification of gig workers as independent contractors undermines tax compliance, labor
protections, and social security entitlements. In the U.S., while reforms like the ABC Test and Qualified Business Income Deduction (QBID) attempt to reconcile flexibility with accountability, challenges persist due to complex filing requirements and inconsistent judicial interpretations. In India, despite formal recognition of gig and platform workers under the Code on Social Security, 2020, the taxation regime remains fragmented, lacking enforcement, employer contribution mandates, or incentive structures tailored to the realities of digital labor. The paper evaluates key judicial precedents, legislative gaps, and administrative hurdles in both jurisdictions, arguing for the creation of a third legal and taxation category suited to gig work’s hybrid nature. Drawing on comparative insights, the paper recommends a structured, simplified presumptive taxation model for India, combined with
mandatory reporting obligations and platform contributions to ensure fiscal transparency and social protection. The analysis highlights how tax policy must evolve in tandem with labor regulation to promote equity, compliance, and economic resilience in the digital economy.
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