GST’s “TCS Clause” brings E-commerce rivals Amazon, Flipkart & Snapdeal together

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E-commerce giants Flipkart, Amazon and Snapdeal make piece and came together in the Capital to voice concerns about tax collection at source (TCS) standards under the draft model Goods and Services Tax (GST) law. Under TCS, online marketplaces would have to deduct a segment of the amount payable to sellers and remit it to the government.

“None of us is saying GST is bad. It is going to be transformative for India and the e-commerce sector,” said Sachin Bansal, co-founder of Flipkart. “However, TCS is a serious issue. At current scale, Rs 400 crore of capital per annum will be locked into the system that will not be accessible to sellers and this will eat into their working capital. This will deter them from listing with us.” Bansal said there are other ways to make sure that sellers on online marketplaces pay their fair share of taxes.

He with Amit Agarwal, Amazon India’s country head and Kunal Bahl, co-founder and CEO of Snapdeal, said e-commerce companies can share data with the authorities and this will make sellers more tax compliant. “We are already doing this in three states — Rajasthan, Delhi and Kerala,” said Bansal at a Ficci event. Bahl of Snapdeal announced the proposal of tax collection at source is directed only at e-commerce marketplaces.

“It will hurt lakhs of small sellers by making online sales expensive and cumbersome for them. The proposal, while adding needless complexity for the sellers, provides no benefit to tax authorities and will lead to duplication of information, followed by need for its reconciliation. It is a measure, which goes against the spirit of making India digital and improving the ease of doing business in the country,” he further added.

Amazon India’s Agarwal said TCS could completely change the trajectory of e-commerce in India. “It’s upon us to figure out policies that make the flywheel spin faster and still achieve the objective. And, you can achieve that through real time data information sharing.”

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Sameeksha Bhardwaj, From ITvoir News Desk

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