Well, despite a concerted effort by e-commerce platforms to ensure that they are saved from the effects of the proposed GST bill, state finance ministers are not relenting. It appears that the bill will be passed and that companies, that have gone untaxed for so long, will finally face taxes in the country.
Also known as the Goods and Services Tax, the GST bill actually proposes an indirect, national, value added tax to be implemented in the country starting from 1 April 2017. This tax will be levied on the manufacture, sale and consumption of goods and services throughout India. It will also replace most of the taxes levied by the central and state governments in the domain.
Well, e-retailer companies are now about to face the whip though, although they are attempting their best to find a way to squiggle out of the situation. They are now arguing that online retailers are actually simply acting as go-betweens and don’t really make any money out of the sales made.
A group of companies that includes Amazon, Snapdeal and Flipkart, is also saying that yes, we will pay the GST if we must, however as we are just service providers, we want to be liable to pay the taxes only on the service income. The e-retailers are attempting to justify their position by stating that, since they make most of their money through advertisements, and already pay service tax on the same, that should be the end of the matter.
So who will pay the taxes on the said goods though? Well, e-retailers believe that since manufacturers are actually preparing the goods, they should shoulder the burden of GST through manufacturing tests.
Meanwhile, speaking on the topic NASSCOM said that while a whole lot of opportunities were being created thanks to the e-commerce sector and small industries were able to market their wares, taxes simply cannot be avoided.
Speaking on the topic, state finance minister panel chairman and West Bengal Finance Minister Amit Mitra said,
E-commerce brings in competition, but you are also adding some value. Else how are your companies generating so much valuation.
It was also mentioned that while producers pay excise duty, consumers pay VAT, e-commerce companies that have managed to ride to billions of dollars of valuation on the back of business, leave unchecked.
Meanwhile, the new structure is slated to be rolled out from the 1st of April, 2017. E-commerce companies for now, have been asked to give a written undertaking about their own views about the situation and how things should actually work. That shows that the panel is at least willing to listen to the views of the companies on the matter.
Well, lets see how things pan out. While, companies may not like it as it may make a significant hole in their pockets. Like it or not, the bill is likely to go through. And a unified, GST tax will not be all bad either. At the very least, issues like arbitrary impositions of taxes by state governments, differing policies, will be resolved once GST is implemented.