According to IAMAI, the bill contains imprecise and overlying definitions for e-commerce activities failing to take into account the different business models that exist in this sector.
For instance, the definition of 'aggregator' suggests it applies only for services and that too, only for 'listing' of sellers. The GST bill defines 'aggregator' as a service that lists 'persons providing service 'X' under the brand name or trade name of the said aggregator. However, under this definition, online classifieds like Naukri will not qualify as 'aggregator', because jobs listed on Naukri are actually offered by other companies in their name, the industry lobby argued.
The GST definition also fails to recognize online classifieds such as Olx and Quikr, which provide listing services for 'goods', as it only defines 'aggregators' for services.
Another issue that arises from the current avatar of GST bill is that Online Travel Aggregators (OTA) like MakeMyTrip and Yatra can be wrongfully qualified as 'operators' rather than 'aggregators', as they facilitate payments and supply of services, as opposed to listing 'persons providing service of a particular kind under the brand name or trade name of the said aggregator'.
The bill also defines 'aggregators' and 'electronic commerce operators' (or 'operators') as two separate categories, with tax liabilities defined for the 'operators', possibly leading towards uncertainty about whether the 'aggregators' too are subject to the same liabilities, the industry lobby noted.
"These discrepancies may lead to misinterpretation of the tax provisions by both regulators and the internet services companies, leading to unnecessary compliance related conflicts in the coming days," said IAMAI.
Meanwhile, Sachin Bansal, the poster boy of Indian e-commerce and co-founder of Flipkart has said that the clause relating to collection of taxes at source in the proposed GST draft is a concern that would impact the industry. "We believe that TDS process that has been recommended -- about holding some tax and paying that on behalf of the seller -- that I think is some thing that will be very difficult for us to implement in practice," Bansal told reporters in Bengaluru on Wednesday.