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Govt likely to clarify tax norms for e-commerce companies
Nov '15
Taxation for e-commerce companies operating in India has been a grey area fro some time. The government is now preparing to issue a clarification to end the confusion over e-commerce companies that operate marketplaces, so that states do not impose taxes on them, a leading business newspaper has reported.

The newspaper quoted a senior government official as saying that e-commerce players such as Flipkart, Amazon India and Snapdeal should not face the same taxes as brick and mortar retailers. The official said that only the buyer and the seller have to be taxed and not an e-commerce company which only provides a platform for the transaction.

The official said the Department of Industrial Policy and Promotion (DIPP) has received inputs on framing e-commerce guidelines from nearly all states and is drafting a policy to define the marketplace model in an unambiguous manner.

The government's hand seems to have been forced after Karnataka proposed tax deducted at source (TDS) of 1 per cent as a value added levy on payments made to sellers by ecommerce companies. There is a worry that similar moves by the states could distort the tax structure, increase compliance costs and derail the rapidly growing industry. E-commerce companies that have an inventory-based model may not be able to take advantage of the marketplace definition.

The Confederation of All India Traders (CAIT) had recently lodged a complaint with the DIPP against e-commerce players alleging that e-commerce portals are circumventing the law and are engaging in B2C activities, which is prohibited for e-commerce marketplace portals.

The DIPP forwarded the complaint to the Reserve Bank of India (RBI) and the Enforcement Directorate (ED), requesting them to examine CAIT's complaint and take necessary action, CAIT had claimed. (SH)


Fibre2Fashion News Desk – India

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