CAIT said that e-commerce companies through their festive sales are depriving the government of “huge amount of GST revenue” by charging GST on the discounted price of the products instead of levying it on the maximum retail price.
Traders’ body Confederation of All India Traders (CAIT) in a letter sent on Sunday to the Finance Minister Nirmala Sitharaman said that e-commerce companies through their festive sales are depriving the government of “huge amount of GST revenue” by charging GST on the discounted price of the products instead of levying it on the maximum retail price. “E-commerce companies like Amazon and Flipkart instead of charging GST on the maximum retail price of the product are charging it on the price after discount. This is leading to heavy loss of GST revenue to the government,” CAIT Secretary General Praveen Khandelwal told Financial Express Online.
The letter also drew Nirmala Sitharaman’s attention towards 10 per cent to 80 per cent of ‘deep discounting’ on goods sold on online platforms particularly during their festive sales, which according to Khandelwal is “predatory pricing,” and that the government is taking ultimate hit in terms of GST revenue due to “open manipulations of these e-commerce companies.”
Annual sales by e-commerce companies offer products at higher discounts claiming to provide more value for money and accessibility of goods which were otherwise inaccessible to consumers based particularly in small cities. However, coupled with internet penetration and affordable data and smartphone prices, it has reportedly enabled rural and semi-urban consumers to benefit from the services of the e-commerce companies at affordable prices even as the e-commerce companies partner with local kirana stores for faster delivery of goods to consumers.
On the other hand, CAIT has been arguing for a level playing field between e-commerce and offline retailers in terms of pricing and discounting. “We believe e-commerce is the future and we are not against it but there has to be a level playing field to compete. We have urged the Finance Minister to investigate business models of e-commerce companies and their tax avoidance,” said Khandelwal.