Ecommerce businesses to be scrutinized over tax in states

The Indian eCommerce industry, which is all set to break the records in the near future to come out as a multi-million business, will now be strictly scrutinized by the state governments.

As per an Economic Times report, Delhi, Kerala and Uttar Pradesh have already started the process and other states might take the lead anytime soon. The process, which demands additional disclosures of businesses and trading, might lead to more complexities and costs to the eCommerce industry. It also means an added layer of scrutiny on the online marketplaces like Amazon, Flipkart and eBay that connect the buyers and sellers.

State governments, reportedly, do not want to miss out any business. And to ensure that they get what they are entitled for, they are leaving no stone unturned. What added more to our expectations is the fact that the development came at a time when the Narendra Modi government is inviting business from across the globe and is trying to ease the process of doing business in India.

The Delhi government has sought details of vendors who are carrying out business in the state by selling commodities to buyers residing in the state and vice versa. And the deadline to submit the details is July 20, 2015.

The Kerala government, which has tied-up with the state tax department, has asked the companies to file a monthly return disclosing details of transactions, which also includes goods transported to and from the state.

The Uttar Pradesh tax department has made it mandatory for air cargo operators, courier services and warehouses to get a service provider registration number and maintain records in the state for operating a business that involves taxable goods.

The steps initiated by these three states might also motivate other India states to set a platform for taxation under Goods and Services Tax (GST) as this will help the state government to avoid unnecessary litigation.

Other states followed by Delhi, Uttar Pradesh and Kerala have already settled up a group under the state finance ministers on the goods and services tax (GST), which is listed to be implemented on 1^st of April 2016, to ensure that the subject is tackled effectively under the new tax regime. The measures undertaken by the three states set the stage for taxation under GST.

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