AIOVA cautions sellers against retail exports through ecommerce marketplaces; request etailers to display risks

Online sellers’ lobby group All India Online Vendor Association (AIOVA) recently released a trade advisory notice for retail exports. They have cautioned sellers against selling globally through online marketplaces such as eBay and Amazon.

AIOVA shared a copy of this notice with Indian Online Seller that aims to inform sellers about the present trade procedures. The lobby group says that many seller accounts have been suspended by the Directorate General of Foreign Trade (DGFT) due to compliance issues. And hence they want vendors to be careful while selling their wares via global online marketplaces.

“Ecommerce exports seem lucrative and profitable, but the current trade procedures need to be changed in order to make the trade seamless and viable. We request all sellers who are currently exporting or looking to export via Amazon and Ebay to consult a Chartered Accountant or DGFT consultant and take clarity of the procedures and taxation compliances. In today’s scenario, lot of retail exporters have been sent notices by the DGFT for not complying with the procedures and suspended them from carrying out any foreign trade. In such situation, Amazon, Ebay or any other marketplace cannot help the sellers,” wrote AIOVA in its notice.  

According to AIOVA, some of the mistakes that ecommerce exporters make are:

• Not availing Import Export Code
  
• Dispatching the shipment by declaring them as samples
  
• Not demanding Foreign Inward Remittance Certificate (FIRC) from the bank
  
• Not applying for Bank Realization Certificate (BRC)
  

The above-mentioned elements are essential part of the mandated flow of an export transaction as required by Government of India, which is mentioned in Foreign Trade Policy and on DGFT website.

GST has also changed things for ecommerce exporters

The Goods and Services Tax (GST) has not only changed the local ecommerce scene but also global trade for sellers. AIOVA listed down things that are different in the post-GST period:

• New Export Procedure:  Till now exports and samples were exempt from any payment of taxes at the time of export. In the new GST regime, exporters need to pay IGST or remove the shipment after submitting a Letter of Undertaking for the value of IGST with GST Officer. The paid IGST or LUT can then be reversed after submitting proof of export (Shipping Bill)
• Samples are now covered under GST, so for each shipment declared as sample, sellers need to pay GST

• Fees such as commission, shipping charged by foreign marketplaces, such services are covered under GST on reverse charge mechanism (RCM)

Online marketplaces should display risks involved

The sellers’ association want ecommerce firms that allow sellers to sell globally to clearly spell out the risks involved and update the trade requirements. This would help vendors to make an informed decision and not break any foreign trade rules.

AIOVA stated,

“We request marketplaces to display the risks and requirements in their current global selling onboarding program. We have requested the Commerce Ministry and Niti Aayog to look into the same, and we are glad to hear that soon the clearance formalities will be made easier and Shipping Bill will be generated electronically. But the roll out of the same is not yet clarified.”