Skip to main content

Tax Breather for Ecomm Cos for 3 More Months

By
Tax Breather for Ecomm Cos for 3 More Months
Rollout of tax collection at source was deferred to July 1; implementation after systems fully ready
India proposes to defer the implementation of tax collection at source (TCS), a move that will give a breather to Amazon, Flipkart and other ecommerce service providers. “It has been decided to defer it for three months,” said a senior government official aware of the development. Online platforms have to collect the tax from those selling goods on their sites while making payments for goods sold.
The tax, designed as a measure to improve compliance by helping to track such transactions, was to come into effect on July 1. Ecommerce platforms, which have multiple sellers with small turnovers, have been wary of the provision, fearing an increase in the compliance burden. Their lobbying had already led to the tax being deferred by a year, just days before the goods and services tax (GST) rollout on July 1 last year.
Experts Favour Deferral
It was expected that the provisions would become effective from July 1, especially after some state governments issued directives to their GST departments asking them to gear up for its implementation. While the GST regime is regarded as having stabilised, it was felt the imposition of TCS could lead to a heavy burden on the GST Network (GSTN). The government is keen that systems are fully prepared to handle the added transactions before implementation.
The TDS/TCS provision mandates that notified entities have to deduct up to 1% state GST and 1% central GST on intrastate supplies of up to Rs. 2.5 lakh. TDS stands for tax deducted at source. In the case of interstate supplies of over Rs.2.5 lakh, TDS will be 2% integrated GST. These provisions are aimed at checking tax evasion as TDS/TCS leaves an audit trail.
For ecommerce platforms, this will mean tax deduction and deposit of 1% on every payment made to a vendor whenever goods are sold. For effective implementation of the provision, states and the Centre will also have to put in place administrative machinery to ensure the deductors are registered with them. Tax experts also favour deferral. “The provisions for tax collection at source require all vendors of electronic commerce operators (ECOs) to be registered and GSTN to be able to allow credit to the vendors for the GST collected by the ECO,” said Bipin Sapra, partner, EY. “These are intricate processes and need to be debated and tested before they can be implemented and hence due time should be given to all involved before they are brought in force.”
The Economic Times, 25th June 2018, New Delhi

Comments

Post a Comment

Popular posts from this blog

Govt’s gamble on GST cuts: What do the bond and currency markets signal?

By
  It’s not just humans who suffer from cognitive biases; markets do too. Interestingly, different financial markets exhibit distinct biases, each interpreting events through its own prism of prejudice. Take the recent announcements on GST reforms: equity markets have chosen to view them through the lens of growth, while bond and currency markets are focusing on potential macroeconomic risks—fiscal pressures and current account challenges. So, which lens captures the true pulse?Equity markets may be right in expecting GST reforms to revive consumption, which has remained lacklustre for a while. But the key question remains—will this revival come at the cost of broader macro stability?It is well known that consumption stocks have rallied since the GST rationalisation announcement. But what about bond markets? What signals are they sending since this rejig was announced from the ramparts of the Red Fort?The signs aren't encouraging. Bond prices have slumped and yields have surged sinc...
Post a Comment
Read more

Luxury carmakers urge clarity on GST rates to boost festive season sales

By
  A clear picture regarding new GST rates at the earliest will help the overall auto industry, including the luxury car segment, to regain momentum in the ongoing quarter, which generally sees enhanced sales on account of the festive season.The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation.In an interaction with PTI, BMW Group India President and CEO Hardeep Singh Brar said the recent speculation about the change in GST rates has caused uncertainty in the minds of consumers.Consumer interest and demand is strong, but they (prospective buyers) have adopted a wait-and-watch approach, and this delayed decision-making is impacting new vehicle sales at a certain level, he noted."Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector's contribution to economic growth during this quarter is robust," Brar stated.He also hoped that the sustainable p...
Post a Comment
Read more

Sebi proposes tighter norms for green bond third-party reviewers

By
  Sebi on Friday said it has proposed to tighten the norms to appoint independent third-party reviewers or certifiers for green debt securities to align them with requirements for other ESG-linked bonds.In a draft circular, Sebi said that the current norms for green bonds, introduced in February 2023, lack detailed requirements around reviewer independence, conflict of interest mitigation, and disclosure standards that are now in place for other ESG-linked securities under a June 2025 circular.The regulator's latest proposal seeks public comments on a revised framework that would bring parity by incorporating comprehensive criteria for third-party certifiers of green bonds on non-convertible securities.Under the proposed norms, issuers of green debt securities will need to appoint reviewers who are independent of their management, directors, and key managerial personnel. These reviewers will be remunerated in a way that prevents any conflicts of interest and possess relevant expert...
Post a Comment
Read more