Amazon has finally spoken about the tax issue with the Karnataka government. The company feels disappointed with all the hue and cry on the issue, as it has led to cancellation of licenses of so many sellers who wanted to scale up their businesses via the ecommerce route.
Amazon stresses that the fulfillment centre is being run according to the laws of the country. The invoices generated are on behalf of the sellers, which mean it is not liable to pay taxes as implied by the Karnataka state tax department. “Amazon India does not generate invoices on its name….the invoices generated are in the name of the sellers who are helped with a marketplace model, a storehouse to stock their goods and last-mile delivery by providing courier services,” said a person familiar with Amazon India’s arguments made before the tax department.
Amazon is continuing with its services through which self-registration and assisted shipping services will be given to sellers selling through its online platform. Currently, about 30% of the 16,000 sellers are using availing this service and eventually more sellers could start using the same.
“We are disappointed with the delay on the resolution of the issue as it hurts the small and medium enterprises in Karnataka the most,” said a spokeswoman for Amazon India. “We are unable to offer them the opportunity to service customers across the country at significantly lower costs to them.”
“Amazon India has more than 16,000 sellers registered. So 25-odd merchants removing goods from warehouse does not in any way impact business,” said the executive cited above. “But nonetheless, it does impact many of the small and medium businesses which want to scale up their business and cannot do so.”
Although the tussle is still on, Amazon hopes to have the issue resolved as soon as possible. However, a certain set of amendments to the VAT Act 2003 have been recommended by the state commercial taxes department. If cleared, this could lead to the end of Amazon’s existence in Karnataka.
“It would be appropriate for state authorities to engage with Amazon and find a mutually acceptable solution which ensures tax is paid on the transaction rather than make it a large issue which impacts business climate of the state,” said Harish HV, partner at consulting firm Grant Thornton.
It’s not just Amazon, we are all waiting for the outcome to this issue!
After dwindling with her family business, into travel and hospitality, for more than 3 years, Pooja Vishant found her true love in writing. Happy-go-lucky and cheerful, she loves pink; so pink is the way to go if you want to get into her good books. The Associate Editor keeps track of even a leaf that has moved in the ecommerce world!
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