Etailers want aggregators out of GST

Ecommerce companies are lobbying with the government to keep aggregators that run marketplaces out of the proposed goods and services tax (GST) net. While the administration tries to persuade the Opposition to reach a consensus over the proposed levy to be started on April 1, 2016, online retailers are stressing that the companies running platforms that allow vendors and customers to transact shouldn't be subject to GST. They insist that they also want these companies such as Flipkart, Amazon India and Snapdeal to be viewed as "service providers" to the vendors, liable to pay GST only on service income. The online retail sector is facing multiple taxation issues and is keen that their core concerns are addressed before April 1 GST rules are laid out as per the government's schedule. Vendors would be liable to pay GST on the goods sold through their portals.

Pramod Jain, head of taxation at Flipkart who is in support of the recommendations feels that the concept of India becoming 'one country, one tax rate' for the first time post-Independence is promising for ecommerce. It will help widen choices for consumers as they will enjoy full freedom for the first time to buy from any state or seller. Experts are of the opinion that the industry expects reduced paperwork, seamless state borders and unambiguous rules under GST to realise its potential. Hence, it is important that they are recognised as service providers, under the marketplace model, and liable to pay GST only on their service fees.

The detailed representation to the government is aimed at ensuring a friendly GST regime designed around global practices. A joint working group of both central and state government officials is looking at the GST design architecture for ecommerce. As GST will accrue to the state where the consumer is located, the current dispute as to which state is competent to levy value-added tax will hopefully be addressed soon.