Telangana to amend tax laws for online trade

Amazon’s India operations continue to face hurdles as it expands in the country. A day after it announced a mega investment to establish its largest fulfillment centre in Telangana, the state government has decided to amend a new law to regulate online trading and earn tax revenues from such sales.

According to commercial tax minister Talasani Srinivas Yadav law would be amended to bring corporate hospitals under the luxury tax net. He also added that the government would come down heavily on traders indulging in tax evasion by falsely projecting their transactions under 'zero trade', and announced a reward of Rs 50,000 or 10 percent of amount of the tax collected, to those who alert the government on such irregularities.

Earlier, Karnataka government had mandated the American e-commerce giant Amazon to explore options and comply with state’s VAT laws. After Amazon opened its modern warehouse in Hoskote, Bangalore in January it could tie-up with just 50 dealers because its ‘fulfillment model’ ran into trouble with Karnataka tax authorities. Under this model, the dealers register the Amazon warehouse as their additional place of business (APOB), also called branch, with VAT authorities. The Commercial Taxes department accepted this initially, but later questioned the business model. The local VAT offices (LVOs) soon issued notices asking dealers why their branch certificates be not cancelled.