E-commerce majors seek removal of tax at source on sellers

Moneycontrol BureauE-commerce majors Flipkart, Amazon, and Snapdeal, among others, are trying to convince the government into removing a 2 percent tax at source that needs to be collected by these companies from sellers on their portals on the government's behalf, reports the Mint today.

The draft of the Goods and Services Tax law, slated to go for vetting by the GST Council Saturday, is likely to retain the tax.

Online retailers have been opposing the tax claiming it will drive sellers into selling more through offline modes, and also increase the compliance and other costs. They argue the tax will block capital for 25-50 days and add to working capital burden of sellers, particularly the smaller ones. They added that the tax discriminates between online and offline market places. And they protested the cumbersome reporting provisions.

Current provisions of the law mandate e-commerce companies to deposit the tax with the government within 10 days from the end of the month in which it has been collected, and furnish an electronic statement containing detailed breakup in terms of CGST, SGST and IGST. It is also important that the entries shown by the companies match with the returns filed by the suppliers, failing which the supplier will not be able to claim credit for the tax payment made.

Heeding to a plea by states on revenue loss due to small suppliers staying out of the tax net under GST, the draft GST law carved out a separate chapter to deal with taxation in the e-commerce sector.