Skip to main content

Not Just Cong, Etailers too Hate GST as they Face Compliance Load

By
Experts feel burden of compliance and administration will fall on online marketplaces
The long-awaited Goods & Services Tax (GST) Law, which was expected to resolve the tax issues faced by online marketplaces, could end up increasing compliance costs for them and also create working capital issues for sellers on their platform.
The proposed “Model GST Law,“ which awaits legislative clearance, says that online marketplaces will have to deduct taxes directly on the total sales made by merchants on their platforms and pay it to the government. Till now, online marketplaces passed on the payments made by customers to sellers after deducting their commissions and fees (such as for logistics or advertisement.) Tax experts and online marketplaces feel that this will put the burden of compliance and administration on the ecommerce companies, which may hurt both their and sellers' margins.
While Flipkart, India's largest online marketplace, welcomed the new law, it also said that the provisions would put sellers on its platform at a disadvantage as compared to brick-and-mortar retailers.
“A specific proposal in the draft law relating to tax collection at source will prove to be detrimental to lakhs of small and medium sellers who do business on ecommerce platforms. This clause, which is not applicable to offline sellers, will hurt the working capital requirement for these sellers as they work on small margins to provide affordable rates to consumers,“ Flipkart said in an emailed statement.
Players like Shopclues, which is valued over $1 billion and has 5 lakh registered merchants, are closely watching the roll out and execution of the policy.
"We are cautiously optimistic about it, especially in our context as the current draft does not address needs of marketplaces clear ly,“ said Radhika Aggarwal, chief business officer at ShopClues.“Unless the government puts a robust digital infrastructure in place, compliance will put undue pressure on small businesses and us. We also really hope that statelevel entry taxes and octroi taxes will be abolished enabling SMEs to service consumers from across their state more efficiently.“
Online marketplaces have been waiting for the GST law to help them resolve tax conflicts with various states like Uttar Pradesh, Karnataka and Gujarat who were coming up with new laws to tax online sales. Players like Flipkart, Snapdeal and Amazon had stopped selling products worth over Rs 5,000 in UP owing to tax issues with the government. But under GST, tax collected will be paid to the consuming states by the government.
The GST law is likely to bring online marketplaces, including those selling services, under a tigher tax net. “If the merchant sells goods directly to the consumer, and no one declares it, there is a greater threat of evasion in ecommerce transactions,“ said Sachin Menon, partner and head of indirect tax at KPMG India, who said this provision has been introduced to make the law foolproof.
The Economic Times New Delhi,16th June 2016

Comments

Post a Comment

Popular posts from this blog

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

By
  Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes   The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30%   The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)   Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6
Post a Comment
Read more

Jaitley plans to cut MSME tax rate to 25%

By
Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem
1 comment
Read more

Don't forget to verify your income tax return in August: Here's the process

By
  An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s
Post a Comment
Read more