Amazon isn’t agreeing with tax department of Karnataka
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Ecommerce giant Amazon is in a tough fight with the commercial tax department of Karnataka. In a yet to be settled case, the deadlock involves VAT for certain transactions by Amazon India. As per a news report by The Economic Times, the department laid down two conditions to the Indian arm of the Seattle-headquartered ecommerce giant as an alternative to being registered as a dealer. Firsty, Amazon India must disclose details of transactions carried out on its website and secondly, it must take primary liability if a merchant defaults paying value-added tax on transactions executed on Amazon.While Amazon has no problem with the first demand, it has declined the second, senior government officials told the financial daily. The two conditions implied that VAT authorities would want to treat Amazon India as a "commission agent" -- a status the online marketplace is not willing to accept in view of federal regulations that bar foreign direct investment in online retail.
The Commercial Taxes department began working on a solution after Karnataka CM Siddaramaiah recently asked it to sort out issues flagged by the US firm. The company's dealer-expansion efforts in Bengaluru have been grounded the past one year after VAT authorities stopped issuing branch certificates to merchants wanting to partner with Amazon.
The deal offered by the tax department also required Amazon to prove if VAT had been paid for a certain transaction if the department raised a claim. At a meeting with top tax officials, Amazon India executives held on to the argument that their core activity in India included providing modern warehousing facilities for merchants to store products, display and provide a technology-enabled online marketplace for those products, and facilitate online sale and receipt payment on the merchant's behalf, among other things. Since each partner-merchant is a VAT assessee, and required to remit VAT collected every month, Amazon executives said it cannot get into those aspects.
According to tax experts, the workaround the Commercial Taxes department has suggested will only transfer VAT officials' job to the online retailer.
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(Image: Reuters)
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