Rewind 2021 and prospects for 2022 Rewind 2021 and prospects for 2022
Home / Knowledge / News / Apparel/Garments / E-commerce players urge govt to re-evaluate TCS in GST
E-commerce players urge govt to re-evaluate TCS in GST
Feb '17
E-commerce players in India have urged the government to re-evaluate the clause of “Tax Collection at Source” (Section – 56) proposed under the Model Goods and Services Tax (GST) Law. TCS Section – 56 clause under the GST draft model law, mandates e-commerce marketplaces, to deduct 2 per cent of the transaction value and submit it to the government.

As an estimate, this clause would lead to locking up about Rs 400 crore of capital per annum for the e-commerce sector. In addition, it would result in a loss of an estimated 1.8 lakh jobs, putting a halt to the growth and investments in the sector, e-commerce sector stakeholders said at a press meet organised by the Federation of Indian Chambers of Commerce and Industry (FICCI).

The e-commerce marketplace model facilitates sellers (whose turnover is generally in the range of Rs 50 lakh to Rs 10 crore per annum) in maximising their capital efficiency by rotating it frequently, which helps to provide the volumes required to generate profit for them. However, blocking capital would disrupt the cash flow, thus making it difficult for them to generate profits. Additionally, TCS is bound to increase the working capital requirements for these sellers, who might resort to increasing margins or internalising the costs, to cover the additional burden. Hence, there is a need to find out alternatives which could be employed to ensure that regular information on tax is made available to the government, without jeopardising the business model and future growth prospects of the nascent e-commerce sector.

“At the moment, the e-commerce sector in India is at less than 2 per cent of the entire retail segment and moreover, at a very nascent stage, with a promise of high growth in the future. Subjecting the sector to a major compliance at such an early stage will not only result in slowing it down but also deter the benefits that e-commerce fosters in terms of employment creation and giving a boost to both the manufacturing and services space by providing an apt platform. Moreover, this clause is discriminatory towards online sellers as it does not exist in the offline retail segment,” said Dr Didar Singh, secretary general, FICCI.

Singh said that the government should find out alternative ways to replace the clause, may be the information related to the sellers declared to the government would be the best feasible option available. He also stressed that the sector is one of the core pillars of the government’s Digital India campaign and is needed to be nurtured with right set of policy frameworks and guidelines.

“The proposal (TCS Section – 56), while adding needless complexity for the sellers, provides no benefit to the tax authorities and will lead to duplication of information followed by the need for its reconciliation. It is a measure, which goes against the spirit of making India digital and improving the ease of doing business in the country. We are positive that the government will address this crucial concern,” Kunal Bahl, co-founder and CEO of Snapdeal, said at the press meet.

Echoing Bahl, Amazon India country head Amit Agarwal said, “We remain concerned about the TCS provision which we believe will negatively impact the growth of marketplaces at a stage when the industry is still in its infancy. There is an urgent need to re-evaluate such requirement. We are working with the government on this and hope for a favourable resolution.”

“The TCS clause would lead to blockage of approximately Rs 400 crore of working capital into the system, and will discourage sellers to come online. Also, the government needs to set a level playing field as the clause is not pertinent to the off-line retail segment. Central and the state governments need to find out alternative ways to address the situation and the e-commerce platforms may give a self-declaration about the taxes being reimbursed by the sellers. Some of the states namely Kerala, Rajasthan and Delhi are already doing the same. I’m sure that the clause would be removed in the greater benefit of the Indian digital space as a whole,” said Sachin Bansal, co-founder & executive chairman, Flipkart. (RKS)

Fibre2Fashion News Desk – India

Must ReadView All

Pic: Shutterstock

Textiles | On 28th Jan 2022

Real US GDP rose at 6.9% annual rate in Q4 2021: BEA

Real US gross domestic product (GDP) increased at an annual rate of...

Pic: Shutterstock

Apparel/Garments | On 28th Jan 2022

Egypt’s garment exports rise by 41% to $2.49 bn in 2021 over 2020

The Egyptian apparel sector’s exports rose by 41 per cent in 2021 to...

Pic: Prasit Rodphan | Dreamstime.com

Textiles | On 28th Jan 2022

Cambodia-Vietnam trade volume touches $9.3 bn in 2021

Cambodia-Vietnam trade volume touched $9.3 billion last year—a rise...

Interviews View All

Textile Industry, Head Honchos

Textile Industry
Head Honchos

Increase foreign exchange and create jobs

Textile Industry, Head honchos

Textile Industry
Head honchos

Marry craft and utility

Textile Industry, Head honchos

Textile Industry
Head honchos

Marry with brand ethos

Daniele Uboldi,

Daniele Uboldi

EptaInks is the screen-printing division of Eptanova, a company that...

Sarah Bellos,

Sarah Bellos

Stony Creek Colors was started in 2012 to build a new future for natural...

Rajesh Masand,

Rajesh Masand

Established in 1963, the Clothing Manufacturers Association of India, or...

Brad Holschuh, Wearable Technology Lab, University of Minnesota

Brad Holschuh
Wearable Technology Lab, University of Minnesota

A new study led by researchers at the University of Minnesota's Design of...

Daniel Roxbury, University of Rhode Island

Daniel Roxbury
University of Rhode Island

Assistant professor Daniel Roxbury and former URI graduate student...

Dr. Sean Blamires, Evolution and Ecology Research Centre

Dr. Sean Blamires
Evolution and Ecology Research Centre

Using spider silk for clothing may not seem to be an attractive...

Bav Tailor, Label Bav Tailor

Bav Tailor
Label Bav Tailor

Born in London and Indian by origin, <b>Bav Tailor </b>is the Founder of...

Abhishek Bajaj & Samiksha Bajaj, Samshek

Abhishek Bajaj & Samiksha Bajaj

Samshek is a fashion forward tech brand which combines digital experience...

Rocky Star, Label - Rocky Star

Rocky Star
Label - Rocky Star

<b>Rocky Star,</b> an Indian designer known for his inspiration from the...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


Letter To Editor

(Max. 8000 char.)

Search Companies


Leave your Comments


John Varvatos
Grasim Industries Limited
Gloria Jeans
Tory Burch Hong Kong Ltd
Cat Tuong Real Estate Group Joint Stock Company
Sportmaster Ltd.
LC Waikiki
International Textile Manufacturers Federation
Guess Europe Sagl,
KAS Direct Sourcing
Rosset ;& Cia Limited
Gokaldas Exports Limited
H;&M Hennes ;& Mauritz (Far East) Ltd
Lululemon Athletica Inc
Eastman Chemical Company
Benetton Group
Arvind Limited
Lisa S.P.A.
Phong Phu international JSC (PPJ)
IDH – The Sustainable Trade Initiative
Tchibo GmbH
Gap International Sourcing Limited
Tommy Hilfiger
Green Fibre
The Top Form Brassiere Manufacturing Company Limited
Bluestem Global Sourcing Limited
Lacoste (Wanchai)
Alix Partners
Calvin Klein
Aquarelle Clothing Limited
Desigual - ABASIC, S.A.
Hirdaramani International Export Private Limited
Aramark Uniform ;& Career Apparel, LLC
NITI Aayog
Restoque S.A.
Sportswear Company Spa
Seasalt Limited
Hela Clothing Pvt Ltd
Landmark Group
Etam Group Strategy Hong Kong Limited
G-Star Raw C.V.
Vardhman Textile Ltd
Page Industries Limited (Bangalore)
Chori Company Limited
Recron Polyester from Reliance Industries Limited
Sainsbury's Argos Asia Limited
C;&A Sourcing International Ltd
SHAHI Exports Pvt Ltd
IKEA of Sweden AB
Midas Clothing Limited
Truetzschler India Private Limited
Under Armour Global Sourcing Ltd
Rayonese Textile Inc., Division de Culp Inc.
T.T. Limited
Groz-Beckert East Asia LLP
Helly Hansen Far East Ltd
Lenzing Aktiengesellschaft
J ;& P Coats
PVH Corporation
Boardriders Asia Sourcing Limited
Sateri (Jiujiang) Fiber Co.,Ltd
Huntsman (Singapore) Pte Ltd
Gatsby Africa
OVS Hong Kong Sourcing Ltd.
Chico’ FAS
Target Corporation (MN)
Brandix Lanka Limited
Amazon China
Esprit Europe Services GmbH
Vianney Textil Hogar S.A. De C.V.
Maceton Limited
The LYCRA Company Singapore  Pte. Ltd
MAS Active / MAS Kreeda / MAS Bodyline

January 2022

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

Advanced Search