GST Bill passed unanimously; ecommerce industry happy except for TDS burden

Editor | Sep 09, 2020

Rajya Sabha has passed the Goods and Services Tax (GST) Constitution Bill!

What looked like an impossible task has finally been done after years of discussions, heated debates and walkouts. The Bill will now be handed over to the Lok Sabha for its sanction.

The ecommerce industry is delighted by the news as they have been waiting a long time for this. Most of the industry players are happy about the fact that implementation of GST will promote government’s ‘Make in India’ initiative, create more jobs, remove tax barriers, bring clarity, unite the diverse sector and unleash ecommerce’s true potential.

“As a consumer ecommerce brand, our focus is on building a seamless supply chain and logistics network that helps us fulfill customer orders in different parts of the country. GST will help create a single unified market across India and allow free movement and supply of goods in every part of the country,” said Ashish Goel, CEO of online furniture store Urban Ladder.

Check out some other reactions:

TDS still a big problem, according to some etailers and experts

While the news of GST has been received positively, few have raised concerns over the increased tax burden. The Internet & Mobile Association of India (IAMAI) alleged that GST could hinder Indian ecommerce industry’s growth. Flipkart too had expressed concern over TDS clause in GST Bill.

“Tax collection at source is not there for any other sector, why only for ecommerce? According to the GST Bill, any payment made to a supplier would be subject to tax collected at source at the notified rate. This may disrupt the relationship between sellers and ecommerce companies,” said a senior analyst.

Kunal Bahl too tweeted,

“However, tax collection at source by online marketplaces will be a huge working capital burden fr small sellers;needs 2b re-examined #GSTBill. (sic)”

We wonder why these ‘industry experts’ and marketplaces feel that way because sellers are feeling the opposite of ‘burdened’.

Stop making claims on our behalf, say sellers

Indian Online Seller got in touch with All India Online Vendors Association (AIOVA) to inquire if TDS will increase sellers’ burden and create differences between sellers and ecommerce companies as claimed by few industry experts and players.

The seller body’s stand on GST-TDS remains unchanged, in spite of Flipkart, Snapdeal and ecommerce lobby group IAMAI’s strong criticism.

“We are seeing Bansals and Bahls of the world trying to evade themselves from such a regulatory requirement. We are surprised that they are making claims on behalf of sellers, even though they have never intended to meet any sellers or seller representatives. The Bansals and Bahls are making comments to safeguard selfish interest. We hope they stop using sellers name for such an issue and start seeing real pain points of sellers which they are ignoring,” says AIOVA’s spokesperson.

He added,

“Our Association has many times received complaints from sellers who say that due to delay in payments or claims in websites, they are unable to manage funds to pay VAT. Due to such change, now it is onus on marketplaces to fulfill a part of sellers’ liability. This will make them accountable.”

GST: Good bet in the long run

Unicon Baba, keen observer and critic of Indian startup ecosystem feels that there can be some issues in the short term but GST is a good long-term bet.

“Ecommerce wins if sellers and buyers win. Sellers win as tax structure is simplified and rationalized. Even offline sellers would need to be more compliant. Tax evasion can’t be their differentiation any more. Thus levelling playing filled for online and offline sellers,” affirms Unicon Baba while speaking to Indian Online Seller.

When asked if it will increase working capital burden for small sellers as stated by Bahl, he says,

“Tax collection at source if added would definitely add a burden but that should be OK in long term. It would be important for proper implementation of GST.”

Unicon Baba adds,

“But on positive side sellers need to shell out lesser tax after GST for most of the categories. And I believe as tax compliance improves, sellers and traders in large come out of black money economy and embrace legal monetary system working capital would become more accessible.”

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