Will e commerce be kept out of GST regulations?

With the GST being passed a new wave has taken over the textile & apparel industry. What to abide by and what not to is the question. Who will the norms and to what extent? The recent high point discussion was however based on the e commerce industry. Will the ever growing e commerce sector be kept out of the GST norms?

At the first meeting of the Empowered Committee of State Finance Ministers held after the Parliament approved the GST Bill, online retailers said they only provide a ‘platform’ to vendors and customers and do not make money out of sales made. As per the points raised at the meeting, companies like Flipkart, Amazon India and Snapdeal specified their ‘service provider’ existence.

West Bengal Finance Minister and the minister for the panel, Amit Mitra clearly mentioned that consumer buying products online pay VAT, producer pays excise duty but the so called portals go untaxed on the pretext that the transaction is just a pass through. He also highlighted that if these companies are generating so much valuation, then they must be adding some value too, their only income can’t be on advertisement.

However the portals argued by saying that the Vendors selling goods through them should be liable to pay GST. NASSCOM in its representation said the sector is creating huge job opportunities and allowing small industries to sell their products. Stating that e-commerce facilitates competition, it said in the sector, one cannot avoid being in tax bracket.

Mitra asked the e-commerce companies to give in writing how the tax structure for such companies should be under the new GST regime, which the government proposes to roll out from April 1, 2017.

The model draft GST law has brought e-commerce under its purview. Under it, all online purchases will be taxed at the first point of transaction. Bringing e-commerce under GST is expected to solve some of the tax woes occurring by the arbitrary moves taken by the state governments from time to time.