India is cracking down on Chinese e-commerce firms like AliExpress, Club Factory and Shein for tax and duty evasion

• Chinese e-commerce firms have come under the scanner from the Indian government for their sales to Indian customers.
  
• The companies, which reportedly include the likes of Ali Express, Club Factory and Shein, have allegedly skirted customs duties and GST tax payments by positing these purchases as “gifts”.
  
• As a result of allegedly skirting duties and taxes, the goods sold on these platforms are relatively cheaper than the goods sold by Indian e-commerce companies like Flipkart.

Chinese e-commerce firms like Ali Express, Club Factory and Shein have come under the scanner from the Indian government for their sales to Indian customers, according to a report in ET.

The companies have allegedly skirted customs duties and GST tax payments by positing these purchases as “gifts.” Any gifts remitted to Indians that cost less than ₹5,000 aren’t eligible for taxes or custom duties.

As a result of allegedly skirting duties and taxes, the goods sold on these platforms are relatively cheaper than the goods sold by Indian e-commerce companies like Flipkart. Their prices are also listed in rupees and they don’t send invoices with the deliveries. Furthermore, these e-tailers don’t ask for government-issued identity proof from Indian customers.

As part of the clampdown, the Department of Industrial Policy and Promotion (DIPP) has asked post offices and courier to track and monitor the shipment of goods from China. Prior to this, only the customs department was engaged in tracking and assessing physical shipments from China.

A source told ET that around 200,000 daily orders on Chinese online retail platforms from Indians escape duties and taxes. Following an initial crackdown, the volume of these illicit fell by 40%. This is expected to come down even further as a result of the latest actions.

In addition, Chinese e-commerce companies have also been required to register their operations domestically - bringing their India sales more clearly under the government’s jurisdiction.

The move is timely. The amount of cross-border e-commerce sales between the two countries is expected to double by 2021.


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