GST may increase operational costs of ecommerce players

While the much awaited goods and service tax (GST) will be soon be implemented, experts point out that it would only put additional cost pressure on ecommerce players. Their operating costs are expected to go up 10-15 percent once the GST is implemented.

The costs would rise because ecommerce firms will have to pay the tax even if the goods are still lying in their warehouses and they would be able to earn money only when the goods are sold. The online players have got in touch with the tax experts to find a solution to this problem.

Not piling up inventories and avoidinge transfer of inventory across states may help these companies tackle the issue. While the NDA government failed to get an approval to the GST Bill in the Rajya Sabha due to opposition from the Congress, it would make a second attempt in July.

Union Finance Minister Arun Jaitley, is optimistic over the constitution amendment Bill, feels that the introduction of GST will create a nationally unified market and remove trade barriers in the form of cascading effects of taxation, from April 1, 2016.