It’s a TAX-ing business: Amazon faces tax department backlash

Editor | Sep 10, 2020

Just a couple of days back with the reinstatement of a new e-commerce friendly Tax officer, Amazon India had believed its woes in Karnataka were coming to an end. A few months back, Amazon had faced with a complication arising from the violation of FDI laws and the issue of VAT and Sales Tax.

Their exhilaration has been short-lived, though. It is believed that officials from the tax department of Karnataka are now considering attaching assets of dealers who have not yet responded to the notice of cancellation the department issued.

Tax or no tax

This goes back to the dispute between Amazon and Karnataka’s tax department, over which party is responsible for collecting the ‘Value Added Tax or VAT from e-commerce customers.  Amazon India had declined from paying the Value Added Tax (VAT) for transactions on its website, as it believed it was not doing any business directly. Amazon believed the sellers or dealers were directly responsible for the collection of this tax. Evidently, the tax officials did not completely agree with this view and issued licence cancellations to 75 such dealers. Only some dealers have responded, though.

Public versus Private

The officials did not comment on whether other e-commerce companies had been served a similar notice, they simply hope that with Amazon, all other such companies comply with the state tax laws.

Is this just the beginning of the Public office versus Private company war? We hope not, especially since the e-commerce growth wave has converted the threat of FDI being detrimental to actually giving Indian vendors the opportunity to sell their products.


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