A day after rolling out a platform to help its merchants and sellers with Goods and Services Tax (GST) compliance, Flipkart, along with other two biggies of India's ecommerce industry, Amazon and Snapdeal, has raised objections.
At a conference organised by DGFT in New Delhi on Thursday Amazon India spokesperson Raju Kothari, Flipkart's cofounder Sachin Kothari and Snapdeal's cofounder and CEO joined hands to seek modifications in the draft version of the GST law. The provision that has the ecommerce giants worried has to do with tax collection at source (TCS).
The proposed GST model makes these companies responsible for the collection of taxes on behalf of its sellers and merchants. With GST expected to be finalised by this month, e commerce rivals have for the first time presented a joint front to put pressure on the government, as per ED report.
Each e commerce major flaunts more than a lakh of merchants on its platform and they are worried that being in charge of tax collection for these increasing number of sellers is going to increase to be time-consuming and cost increasing.
Whether the government takes note of these objections against GST remains to be seen, however, tax experts are not convinced by the reasoning of these companies.
"It is going to be difficult for the government to keep track of all these vendors and on the other hand, these ecommerce companies are strategically placed in the marketplace, so the onus falls on them. Besides, this legislature is not new and procedures are in place from the government's side, while the concept also exists from taxpayer's point of view. This should not be an issue. And, while it may increase compliance for these companies, this is a way forward to a transparent economy. These companies are at the forefront of development and it should not be difficult for them to create software for easy compliance," says Raju Kothari
Flipkart had recently rolled out a programme to assist its merchants with GST compliance. Called GST Hawala, the programme brings together a network of individual chartered accountants and platforms like Tally and ClearTax to help its merchants.