Expect High Price for Online Products with GST Bill Implementation

BENGALURU: The ecommerce industry in India is likely to urge government to lower the taxes in order to let customers pay less for products. The industry found it necessary to step forward with the demand in the view if the ‘GST (Goods and Services Tax) Bill’ gets passed. Additionally, the industry has asked to revise state-level entry taxes which interrupt in their procedures; source Businessinsider.in.

The consultancy firm, Pricewaterhouse Coopers (PwC) and Industry body Internet and Mobile Association of India (IAMAI) together published a report with 15 proposals for online marketplaces. “The overall GST rate should be lower, especially since currently services are taxed at 14.5%, and any increase beyond 18% could make services extremely expensive for the end customer,” as suggested by the report.

The e-commerce industry is also agonized by value-added tax (VAT) which is imposed by states. According to them, customers will end up shelling out additional money with the cloud of VAT and increased service tax hovering over customers. The joint report also asks the government to clear the provision clearly indicating which transactions are liable to pay GST in e-commerce. “In a marketplace model, it should be clarified that the ecommerce company is liable to pay tax on the amount charged by the company from the vendors for providing various services,” says the report.

“The concept of ‘one-tax, one-market’ on which the GST is based, should be a welcome step for online marketplaces. To create clarity in terms of the tax treatment of online marketplace sector transactions, sector-specific provisions need to be introduced in the GST regime,” Sandeep Ladda, Partner and Leader, Technology & Ecommerce, PwC India.

There is still dilemma if the latest bill is imposable in the state of Jammu and Kashmir. But for the time being, the state is exempted from the tax. The report also suggests that e-commerce companies should be made to pay taxes on the service fees they earn.