GST bill will mean expensive products for e-commerce users

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GST bill will mean expensive products for e-commerce users
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The India ecommerce industry has asked for lower overall tax for the industry after the Goods and Services Tax (GST) Bill gets passed, so that customers don’t have to pay much for the products. Also, it has asked the government to sort out the issue of state-level entry taxes, which hinder the smooth functioning of these companies.

Industry body Internet and Mobile Association of India (IAMAI) and consultancy firm Pricewaterhouse Coopers (PwC) have issued a joint report, which has identified and made 15 recommendations related to online marketplaces and ecommerce once the proposed GST bill is passed.

"The overall GST rate should be lower, especially since currently services are taxed at 14.5%, and any increase beyond 18% could make services extremely expensive for the end customer," noted the report.

The Indian e-commerce industry is also worried about the state value-added tax (VAT). "One of the provisions to this effect should clearly state when and for which transaction the ecommerce company or vendor on the ecommerce platform is liable to pay GST. In a marketplace model, it should be clarified that the ecommerce company is liable to pay tax on the amount charged by the company from the vendors for providing various services," says the report.

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"The 'one-tax, one-market' concept on which the GST is based, should be a welcome step for online marketplaces. To create clarity in terms of the tax treatment of online marketplace sector transactions, sector-specific provisions need to be introduced in the GST regime," Sandeep Ladda, partner and leader, technology & ecommerce, PwC India, told ET.

The report further adds that online marketplaces should only be liable to pay taxes on the service fees that they earn, and asks for clarity on whether services provided in the state of Jammu and Kashmir would be taxable under GST. As of now, the state is considered outside taxable territory.


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