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Now, Telangana eyes share in e-commerce pie

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The annual sales turnover of one leading e-commerce company in Hyderabad alone is estimated at Rs. 2,500 crore. There are other playerstoo.

After Kerala and Karnataka, it has become the turn of Telangana State to feel the pinch over loss of tax revenue from the growing e-commerce transactions.

Though the State, more so its cosmopolitan capital Hyderabad, contributes significantly to the booming e-tailing business, the sunrise sector hardly brings in any additional tax revenues under the existing tax laws.

The annual sales turnover of one leading e-commerce company in Hyderabad alone is estimated at Rs. 2,500 crore. There are other players too. Thus the government, sources revealed, has been exploring possibilities, including amending provisions of its VAT Act, suitably to bring e-commerce transactions under the State tax net.

Governed by Central Sales Tax laws, e-commerce companies like Amazon and Flipkart among others, which were encouraged to set up their fulfilment centres in Hyderabad do not charge VAT on the goods supplied to the consumer States. As facilitators of these transactions, they are only liable to pay service tax under the CST.

Under the existing tax laws, when goods move from one State to other, taxes accrue to the State from which goods originate. But with emergence of e-commerce as a popular B to C business model, manufacturing States are walking away with all the tax revenue while the consumer States are left out of VAT though the sales actually take place in their territory where the goods are delivered, they point out.

Kerala and Karnataka have already flagged the issue and they brought into place certain checks which however are contested by the e-commerce portals. The consumer States argue that indirect tax is consumption-based tax anywhere in the world.

Interestingly, while the Andhra Pradesh government is yet to focus on tapping tax revenue from the burgeoning e-tailing trade, Telangana has engaged tax consultants from Andhra Pradesh too to study and identify the methods of transport of goods, delivery of goods by e-commerce companies and to suggest suitable statutory provisions to capture the tax on consumption.

However, Telangana’s Commercial Taxes Department sources clarified that they have not made any such proposals so far.

Retailers at thereceiving end

Another point of concern, experts say, is that the two Telugu States account for large chunk of consumers patronising online sales of a variety of products promoted by ecommerce portals. Thanks to the competitive prices offered by e-tailing companies sans VAT, the trade volumes of conventional retailers in these States have apparently been taking a hit.

“This is hurting the consumer States on two counts. Their revenue from conventional retailers is falling because of decreasing turnover and secondly, the consumer States get no share in tax revenue from online sale and delivery of goods. Ultimately it will impact our economies and GSDP growth,” they caution. Experts point out that if goes unchecked, this will not provide a level-playing field to the brick and mortar traders who set up shops and carry on transactions in physical form from their premises and pay VAT.

“We are looking at both short-term and long-term measures. The short-term measures are to bring e-commerce consumption under the tax net by imposing suitable tax model on online sales” sources said.

One suggestion is mandatory registration of all couriers involved in the delivery of goods.

The long- term measure would be to focus on manufacturing and become self- sufficient in production of various fast-moving consumer goods and consumer durables, they add.

The proposed GST regime offers hope to address the e-commerce concerns of consuming States by bringing both goods and services under the same tax rates. The taxes on inter-state supply of goods and services under the GST would go to the consuming State. “But with GST yet to be cleared by Parliament, we are looking at adopting a suitable tax model in the meantime,” the sources said.

From: The Hindu

 

Now, Telangana eyes share in e-commerce pie Reviewed by on . press club of india, Indian Tehalka News The annual sales turnover of one leading e-commerce company in Hyderabad alone is estimated at Rs. 2,500 crore. There a press club of india, Indian Tehalka News The annual sales turnover of one leading e-commerce company in Hyderabad alone is estimated at Rs. 2,500 crore. There a Rating: 0
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