Stressing the need for the Goods and Services Tax to be made effective soon, Subho Ray, president of industry body Internet and Mobile Association of India (IAMAI), on Wednesday said that the technology-led start-ups or other online service providers may face compliance issues but the same will be offset by the predictability of GST.
“The GST bill, subsumes all indirect taxes to create one rate and integrate the country into a single market. It will help the digital industry business model flourish by providing uniformity in tax rates and regulations across the country,” according IAMAI.
IAMAI is of the view that the current tax structure is extremely fragmented with different taxes levied at different stages of a transaction. IAMAI has recommended a 27% ceiling for GST.
Dinesh Agarwal, founder and CEO of Indiamart said, GST will result in simplification and reduce double taxation often incurred by marketplaces under the current regime. “With GST, different states will not be able to tax marketplaces differently,” he added.
Agarwal feels that 27% is a bit too much and should be brought down to 20%. “There should be a GST ceiling of certain percentage in the bill beyond which a constitutional amendment will be required,” said Ray.
One of the major challenges for e-commerce companies is the inter-state movement of goods. “With the implementation of GST, more consumers will be able to avail benefits of e-commerce than they are able to do now,” said, Vijay Shekhar Sharma, founder of Paytm.
E-commerce companies operate with different models including a marketplace model such as Flipkart and Snapdeal. Some players have been facing challenges in transporting their goods to states such as Uttrakhand, Kerala, Karnataka, Uttar Pradesh and Maharashtra given the differences in the taxation policy across states.
E-commerce behemoth Amazon was served a notice by Karnataka government to stop selling products from its warehouse in Bengaluru. Under Fulfillment by Amazon, Amazon earns a commission from the seller and the seller has to pay the VAT and other taxes for the transaction.