Taking a cue from old economy, established e-commerce unicorns have finally decided to form a united front to discuss with the government. According to sources, interestingly, it was Ficci which, as a pre-condition, told the start-ups that the only way the industry
body would represent them is if they come with their demands together.
“Ficci has always worked as a representative of a sector as a whole. Whenever we approach the government, it is for the whole sector and not just one firm. We told the e-commerce players that if they want to use our platform to voice their concerns they would have to come out as a united front,” said a senior official at Ficci.
Sources said international consultancy firm KPMG in India had been assigned the task of carving out the representation, as well as a presentation of which would be made public on Thursday. The e-commerce bosses would be talking about tax at source and why it would be extremely harmful to business.
“As per GST, we would have to calculate, collect tax from every single seller on our platform and then submit it to the government. The whole process would increase our liabilities as we would have to spend a lot of man hours and money for calculating tax. This would be death knell to our business. We hope that the representation helps us and the government find common grounds and find a better solution,” said a top boss at one of the three major e-commerce players.
According to e-commerce companies, the calculation of GST
and collecting tax should be done by the government and companies
should not be asked to do it.
While it has been decided that the e-commerce bodies along with members from Ficci would be meeting the government officials, the date has not been finalised yet.
“In all probability, there would be separate meetings with officials in the finance ministry as well as Niti Aayog,” said an executive in one of the e-commerce firms.
Experts believe the major pain point would be tax collection at source, which would create a rift between sellers and e-commerce firms. “Tax collection at source is not there for any other sector, why only for e-commerce? 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 e-commerce firms,” said a senior analyst.
For e-commerce platform operators
Tax collection at source will be a compliance hazard, especially in cash-on-delivery scenarios
IT and other systems will need to be tweaked to ensure compliance with the strict disclosure requirements prescribed under the model legislation
For actual suppliers of goods and services: Tax collection at source may enhance tax costs since many such suppliers do not pay VAT/entry tax or service tax as on date
Since the threshold of liability for GST would not apply on such suppliers, small-scale/start-up suppliers may suffer