Govt takes steps to curb tax evasion by e-commerce firms
The State government has initiated the process of attending to the long-standing issue related to taxing e-commerce companies in the State.
Chief Minister Siddaramaiah on Thursday held a meeting with representatives of global online retailer, Amazon, and senior officials of the Commercial Taxes and Finance Departments. The department, in last June-July, began issuing notices to dealers who do business with e-commerce firms on the grounds that e-business houses were making a backdoor entry into retail business in the country. Currently, they are only paying service tax.
Amazon India had caught the attention of the Commercial Taxes Department when it was found that the company wasn’t paying value-added tax for transactions on its online platform. The argument of the company was that it wasn’t doing business directly and had asked the department to collect VAT from sellers. The department had stood firm on its decision, while Siddaramaiah was not taking any decision on the issue. Congress senior leader Digvijaya Singh had intervened and directed the chief minister to resolve the tax problem. Sources in the government has been saying that the VAT Act would have to be amended to include e-business houses under the tax net.
Amazon has been saying that it was planning to move out of Karnataka as it was not taxed in other states. But the corporate office of Amazon continues to work at the World Trade Centre, Yeshwantpur, Bengaluru, and so far, it has not closed down any of its godowns in the City.
Siddaramaiah, after the meeting, told reporters, “We are holding discussions with e-commerce companies to ensure that there is no tax evasion. I have directed the officials to hold another round of talks with the companies and come out with a concrete solution.” He said the companies do not pay tax. It is their dealers who have to pay it. The Commercial Taxes Department has been of the view that the tax is being evaded. All aspects of this issue will be looked into and appropriate action will be taken, he added.
The department had even planned to attach the assets of Amazon dealers who haven’t responded to its notice to cancel their licences. But the company has been arguing that they do not come under the ambit of the VAT Act.
Official sources in the Finance Department said discussions were also held on simplifying the existing rules for doing e-commerce business. All other e-commerce companies like Flipkart will also be invited to the next meeting.
Sources said that once the GST comes into force next year, then the VAT Act would not be applicable. Also, there would be a provision to impose special tax on e-tailers.
