The development is likely to impact the business of multiple foreign sites such as Shein and AliExpress.
The government is likely to remove the exemption provided on 'gifts' bought from other countries through online commerce sites as it plans check leakage of taxes done using this route.
The development is likely to impact the business of foreign sites such as Shein and AliExpress.
The issue has been discussed during a meeting of the Standing Group of Secretaries on e-commerce which was chaired by Ramesh Abhishek, secretary, Department of Industrial Policy & Promotion (DIPP). The minutes of the meeting was approved earlier this week.
"The exemption provided for gifts may be completely removed to avoid ambiguity," said the government as per minutes of the meeting.
Moneycontrol has seen a copy of it.
This discussion pertains to the concerns raised by local vendors in the country. Currently the customs rules are violated particularly by the gifting route. Following the discussion, the department of revenue has been asked to look into the issue.
The plan is also to track the source country besides consignors and consignees to identify suspicious activities. As per one of the other recommendations, the government could also look at limiting the existing limit of Rs 5,000 to a single consignor or to a particular KYC/Aadhar account.
All goods that are imported into India from abroad are liable custom duties. However, "gifts" worth Rs 5,000 received from abroad are exempted from this.
This is categorically allowed for items imported by air or post.
The All India Online Vendors Association (AIOVA) has said this practice is detrimental for the e-commerce industry. The association calls it an illegal mode of transaction.
"It is a commercial shipment instead of a gift from a relative, friend or an acquaintance," said the spokesperson of AIOVA adding that the clause has been exploited in India so far.
Many of these websites are also soliciting only prepaid payment. There is no option of cash on delivery.
AIOVA has also criticised government's proposal to completely abolish the clause given that it will adversely affect the genuine beneficiaries.Instead it has proposed mandatory registration of foreign e-retailers with Indian government in order to receive payments and carry out shipping.