Tax woes keep ecommerce firms away from UP and Uttarakhand

All the three leading ecommerce firms Flipkart, Snapdeal and Amazon have stopped delivering orders above Rs 5,000 to Uttar Pradesh (UP) and Uttarakhand due to alleged harassment by tax authorities over a form that buyers are required to furnish when purchasing goods from other states. Buyers are mandated to file a VAT declaration, along with the registration number of the vehicle bringing the products, which then has to be submitted by the deliverer.

After Karnataka government’s move to impose one percent value added tax deducted at source on all payments to dealers in the state by ecommerce firms, UP has joined the list of areas where ecommerce firms are finding it difficult to do the business. Last year, ecommerce companies stopped shipping high-value products to UP localities including Noida and Ghaziabad after delivery boys were harassed and consumers refused to pay for products ordered through cash on delivery. Uttarakhand too has similar VAT regulations and such restrictions were earlier imposed in the state of Bihar as well.

Experts expect this issue to be resolved once proposed goods and service tax (GST) regime is implemented.