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GST and E-commerce

Goods and Services Tax - GST - By: - SKP IDT - Dated:- 2-7-2016 - Over the last couple of years, the advent and augmentation of e-commerce market in India has changed the way people buy and sell goods and services. India is adding three new Internet users every second and is the second largest market for e-commerce. Though the sector is still in the infancy stage, considering the endless possibilities in the Indian markets, huge hopes are pinned on the sector and e-commerce in India is expected .....

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Indirect tax laws and whether the same are addressed in the Model GST law or have worsened their position. Current Indirect taxes on e-commerce sector- A nightmare for the industry With the increase in competition in the e-commerce sector, companies are adopting innovative business models to attract customer attention including inventory model (e.g. Shopper Stop, Croma), social network model (e.g. TripAdvisor, Zomato), aggregator model (e.g. Ola cabs, Uber), marketplace model (e.g. Flipkart, Sn .....

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w: Levy of VAT/ CST e-commerce transactions: Since the e-commerce operators are mere facilitators between the supplier of the goods or services and the customer, typically the operators are required to collect service tax on value of commission charged by them to the suppliers. However, considering the complexity of different models under the e-commerce sector, the tax authorities are perplexed whether the movement of goods from supplier to the warehouse of operator would fall within the ambit o .....

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liability on sale of goods hosted on their web portals. It should be noted that though the demand was slashed by the Kerala High Court subsequently, the same issue has replayed in the state of Karnataka, where the state VAT department is demanding VAT on sale of goods from the warehouse of e-tailers. Levy of entry tax on online purchases: Recently state tax authorities of Uttarakhand, Kerala, Karnataka, Assam and Bihar imposed a 10 percent entry tax on sale of goods online. Similarly, the Gujara .....

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uppliers cannot utilise credit of service tax paid by the operators for payment of their Excise/ Service tax/ VAT/ CST liability, since the services availed by suppliers cannot be attributed to their manufacturing/ trading activity. Further, even in case of service tax paid on common input services including accounting fees, rent, etc. the suppliers are required to reverse the credit in proportion to their trading operations (which is considered as an exempt service under the Service tax legisla .....

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bine all indirect taxes as the same would be subsumed under GST. Under the Model GST law, the existing litigation over levy of VAT/ CST and Entry tax on e-commerce transactions would be resolved, as all the taxes would be subsumed under GST. Further, introduction of GST would result in enhanced compliance and transparency and would reduce breakage of the credit chain through availability of cross-sector credits. The same is expected to provide a major relief to the industry and reduce overall co .....

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ons. As per the Model GST law, any payment made by the e-commerce operator to the supplier would be subject to TCS at a rate to be notified. The TCS collected would be available as credit to the supplier. Further, the e-commerce operator would be required to pay the TCS collected and file an electronic statement to disclose TCS collected and supply of goods/ services made through every supplier during the month within ten days from end of month. This move of introducing TCS on e-commerce operato .....

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ld attract GST. Accordingly, there arises a question on whether movement of goods from the supplier to the warehouse of the e-commerce operator without actual transfer of ownership would be subject to levy of GST by considering the e-commerce operator as an agent of the supplier. Further, there is also ambiguity on whether GST would be applicable on stock transfer from one warehouse of the e-commerce operator to another. Treatment of free supplies under GST: Basis the Model GST law, supply of go .....

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e exchange offers by e-commerce operators may attract GST. Valuation of supplies under GST: As per the Model GST law, post supply discounts would be included in the value of taxable supply (except where it is known beforehand). Accordingly, in case of sale of goods at a discount, the operator may be required to pay GST on the price without discount resulting in additional tax burden on the e-commerce operator. In light of the above, though the GST is expected to bring in major benefits to the e- .....

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