Government may levy 50% duties on product ordered from chinese e-tailers

The government may impose taxes and custom duty as high as 50 percent on products that are ordered from Chinese e-tailers to prevent them bypassing customs duty, according to a report by The Economic Times.

Chinese e-commerce platforms ship these goods ordered by Indians by claiming them to be "gifts" as those under Rs 5,000 are not subjected to customs duty. Authorities have seized many such shipments trying to evade customs duty.

Chinese retailers like  Club Factory, AliExpress and Shein will be affected the most by this move.

To reduce these illegal imports, the tax department is planning to charge a mix of integrated goods and services tax(IGST) and customs duty on products ordered from Chinese e-commerce companies and will impose it on buyers at the payment stage, sources said to the paper.

"The government is looking to bring in payment gateways on board on the scheme and when the consumer pays the money, IGST and customs duty will be included in the price," said one source to the paper

The government has not reached the decision to levy one tax or separate tax for different categories of products. The paper quoted experts saying that the imposition of a flat rate on different products can be problematic.

"There cannot be the same rate for different categories such as medicines and the amended higher rates should not violate World Trade Organization guidelines by slapping a flat rate," said Abhishek A Rastogi, a partner at Khaitan & Co to the publication.

Since the government started its crackdown on the imports in January, the numbers have gone down. According to a Bloomberg report taken from a customs document, imports of shipment worth below Rs 1,00,000 fell sharp 55 percent in Q1 of 2019 in Mumbai.