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IAMAI-PwC report suggests roadmap for GST regime
13 May '16
4 min read
The Indian arm of global auditing major PwC and the Internet And Mobile Association of India (IAMAI) in a joint report on the Impact of GST on Online Marketplaces has recommended specific provisions for e-commerce and defining e-commerce transactions clearly.
“If the rules framed under GST put the onus on e-commerce players to disclose and provide information, the provisions should be assessee friendly and should not be so stringent as to lead to a severe penalty or prosecution exposure for e-commerce companies,” the report said.
It has also recommended defining place of supply. The definition of the 'location of service provider' should be provided clearly and the place of supply for e-commerce service providers should be based on the location of the service provider in the case of B2C transactions and that of the service recipient in the case of B2B transactions.
The report said specific rules should be established on when a service will be deemed to be interstate or intrastate. “This is imperative for e-commerce transactions as it is difficult to identify interstate transactions in the case of services provided over the Internet,” it said.
The IAMAI-PwC report said it should be clarified that the liability to deposit GST in the case of a transaction taking place through an online marketplace in respect of sale of goods will be the seller's and not that of the online marketplace company. “Online marketplaces should only be liable to pay taxes on the service fees they earn.”
It also recommended a lower rate especially for services (including e-commerce services) to avoid an increase in costs. The rate should not be more than 18 per cent. Also, the rate should be kept uniform throughout the country in light of the 'one tax, one market' concept.
With the GST potentially around the corner, the report provides an overview of the conditions under the existing indirect tax regime and attempts to identify the key factors that might prove to be important for online marketplaces under the proposed GST regime.
Online marketplaces are on the rise and companies like Flipkart, Snapdeal, Amazon and others are the flag-bearers of e-commerce in India and are responsible for converting millions of Indians into online shoppers. The complex and ever-evolving ecosystem of online marketplaces, involving multiple parties and transactions across nations, is giving rise to a plethora of international and India tax and regulatory issues. Since the introduction of the GST regime will affect the very fundamentals of how business is carried out in India, it is essential to reflect upon the impact on online marketplaces, the report said.
“If the rules framed under GST put the onus on e-commerce players to disclose and provide information, the provisions should be assessee friendly and should not be so stringent as to lead to a severe penalty or prosecution exposure for e-commerce companies,” the report said.
It has also recommended defining place of supply. The definition of the 'location of service provider' should be provided clearly and the place of supply for e-commerce service providers should be based on the location of the service provider in the case of B2C transactions and that of the service recipient in the case of B2B transactions.
The report said specific rules should be established on when a service will be deemed to be interstate or intrastate. “This is imperative for e-commerce transactions as it is difficult to identify interstate transactions in the case of services provided over the Internet,” it said.
The IAMAI-PwC report said it should be clarified that the liability to deposit GST in the case of a transaction taking place through an online marketplace in respect of sale of goods will be the seller's and not that of the online marketplace company. “Online marketplaces should only be liable to pay taxes on the service fees they earn.”
It also recommended a lower rate especially for services (including e-commerce services) to avoid an increase in costs. The rate should not be more than 18 per cent. Also, the rate should be kept uniform throughout the country in light of the 'one tax, one market' concept.
With the GST potentially around the corner, the report provides an overview of the conditions under the existing indirect tax regime and attempts to identify the key factors that might prove to be important for online marketplaces under the proposed GST regime.
Online marketplaces are on the rise and companies like Flipkart, Snapdeal, Amazon and others are the flag-bearers of e-commerce in India and are responsible for converting millions of Indians into online shoppers. The complex and ever-evolving ecosystem of online marketplaces, involving multiple parties and transactions across nations, is giving rise to a plethora of international and India tax and regulatory issues. Since the introduction of the GST regime will affect the very fundamentals of how business is carried out in India, it is essential to reflect upon the impact on online marketplaces, the report said.
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