sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
« VAT (Value Added Tax) »
 Filing of online return for 4th quarter of 2017-18 extension of period thereof.
 No Cenvat credit admissible on outward transportation services from factory to buyer’s premises
  Filing of reconciliation return in form 9 for the year 2016-17
 Govt may send notice to 162 companies; ask for VAT returns
 Cenvat Credit Is Not Income Liable To Be Taxed
 Cos wanting to claim VAT refund on employees' foreign stay can get professional help
 Regarding disposal of pending form DVAT 04 & 07 Form Applications
 Disposal of pending Form DVAT 04 & Form DVAT 07 applications: regarding
 Cenvat Credit Rules, 2017 III Part
 VAT phased out in TS
 Cenvat Credit Rules, 2017 II Part

E-tailing those taxes away
July, 08th 2015

Traditional brick-and-mortar retailers, up in arms against e-tailers and the large private-equity-funded discounts they offer, now have the taxman also batting for them. As FE reported yesterday, tax officials of various state governments are up in arms against e-tailers. In a normal brick-and-mortar transaction, consumers in state A pay a value-added-tax (VAT) when they buy anything at the retail level, even if the good is being supplied from a manufacturer in a state B to a dealer in state A. In the case of e-tail, however, consumers from Delhi, for instance, can be ordering something from a firm based out of Bangalore. In this case, instead of Delhi getting the VAT, the taxes get paid to the Karnataka government. Indeed, going by the ongoing dispute between the state’s tax authorities and Amazon, not all the taxes that should be paid are getting paid either—Amazon says the vendors who sell on its platform have to pay the taxes since it is only a marketplace; the state plans to amend its VAT Act to ensure Amazon pays the VAT on behalf of the vendors who use its platform. This is something that has also been noticed by RBI too. It stated in the state finances report: “Taxing the burgeoning e-commerce space could bolster states’ own revenues, provided there is greater clarity around rules and procedures governing inter-state trade.”

One way out for states is to impose an entry tax, but that seems difficult since it has been held as unconstitutional by high courts. Introduction of the Goods and Service Tax will fix matters since, in the GST, details of all taxes will be available to the GST Network and, based on where consumption takes place, the central government will undertake to transfer their share of taxes to consuming states. In the interim, the states in which big e-tailers are based would do well to find ways to collect the taxes and distribute them to the consuming states. The states, of course, would do well to be careful and not be too heavy-handed. Small vendors don’t pay taxes anyway and, to the extent they are migrating to e-tail platforms, will present a larger base to tax when GST comes into operation.

Another worry relates to taxing products which are offered at deep discounts by online retailers. If a product’s MRP is R100, a 12% VAT means a collection of R12. In most e-tail transactions, however, the consumer price could be much lower, sometimes by 25-30%. Is the VAT to be levied on R100 or on, say, R75? The Fiat case could offer a way out since, in this case, the Supreme Court said excise duties had to be based on costs—but after the verdict, the CBEC came out with a circular that said the merits of each case would be decided at the level of the commissioner. Hopefully, the July 15 meeting of states with the central government would help resolve the issue.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Privacy Policy

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions