Feb 12, 2017
Most of the companies are unsatisfied and complaining about GST’s framework.Another such examples is the united protest from India’s flag bearer e-commerce portals Flipkart, Snapdeal and Amazon. GST has proposed tax collection at source (TDS) a new framework. TDS is income tax collected by seller in India from payer on sale of certain items,which is likely to cause severe damage to online retailers.
Indian online marketplace is wide,poised to be second best after China where large number of customers are attracted to get digitalised. In this era of digitalisation the new framework of TDS to be implemented on 1 July 2017 has severe consequences.
This will raise an ambiguity on the taxation of digital supplies blocking the vital working capital for sellers making them switch to offline.
This implementation includes a clause which necessitates the sellers to forward the tax collected from the payers on their behalf, which will lock ₹400 crores of capital per annum for small sellers, the firm pointed out. Even the estimated 1.8 lakh jobs would fall, investments and growth would be negligible. Sources said that this clause is cutting edge to the online retailers as it does not imply to offline segments.
Sachin Bansal,co-founder of Flipkart said” If sellers know that their working capital is going to get shut in the online selling world,they will take the same goods offline. It will have a sever impact on us”. Snapdeal’s cofounder and chief executive officer Kunal Bahl said”The regulation may also lead to loss of business for two-thirds of the medium and small enterprises that sell on e commerce websites”, he added ” The proposal of tax collection at source,directed only at e-commerce marketplaces, in the draft model GST law,will hurt lakhs of small sellers by making online sales expensive and cumbersome for them”.
They argued on how impasse the e-commerce industry would be in India if TDS is to be implemented.