News Brief
Indian E-Commerce Majors Lobbying To Avoid New Proposed Tax On Sellers, Here’s What You Need To Know
Warehouse for an e-commerce firm. (representative image) (Matt Cardy/Getty Images)
India’s e-commerce giants Flipkart and Amazon are said to be lobbying to ensure a rollback of a new proposed tax on third-party sellers announced during the Finance Budget 2020-21, Reuters has reported.
As per the e-commerce websites, this new tax will be detrimental to the growing industry. While Amazon India has declined to comment on its plan vis-à-vis the new TDS, Flipkart has said that it is working with industry bodies to voice seller concerns.
The tax is also expected to impact food delivery restaurants on portals like Zomato-Swiggy and cab drivers using online aggressors like Ola-Uber. It is not expected to impact buyers.
What Is The New Tax
As announced by Finance Minister Nirmala Sitharaman in her budget speech, e-commerce companies will have to withhold an additional 1 per cent tax-deduction-at-source (TDS) while releasing payments for third-party sellers on their platform.
This will be over and above the GST tax-deductions charged against the sellers and if passed by the parliament, will come under effect from 1 April.
This tax is not applicable for those sellers who have an annual sale turnover of less than Rs 5 lakh. They would also have to furnish either their PAN or Aadhaar card to claim this exemption.
Opposition From The Industry
This tax has resulted in a backlash both from the e-commerce portals and from the vendors. The sellers claim that this proposal will harm their working capital as they are already paying GST.
As per All India Online Vendors Association, the body had earlier supported this extra TDS but had hoped that in return the government would relax existing TDS deduction provisions like the technical application of section 194H.
The Federation of Indian Chambers of Commerce and Industry (FICCI) has contended that this measure will heighten compliance burden and cause “irreparable loss to the entire industry”. Another lobby group USISPF has called for a deferment of the proposal by 2021.
Finance Ministry’s Assurance
Finance Minister Nirmala Sitharaman though had attempted to assuage the fears of the sellers by assuring that the proposal was not an additional burden and they would be able to offset the amount later.
This though has failed to convince the retailers who expressed concerns over refund delays.
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