New tax tangle for e-commerce firms: Karnataka proposes a 1% levy on payments by buyers to sellers

  • Amazon India, Flipkart and their rivals could soon face tax complications with Karnataka proposing a 1 per cent levy on payments by buyers to sellers on ecommerce sites, a move that could encourage other states to follow suit.

  • The planned levy, in the form of value-added tax deducted at source1
  • Amazon India and Flipkart have fulfilment centres in Karnataka. Goods supplied by producers are kept in these centres before being shipped to customers. The two companies also have their head offices in Bengaluru, suggesting that the bulk of their business could be impacted by any such levy
  • If put in place, ecommerce companies will have to deduct 1 per cent of payments made to vendors before passing the money on, making goods costlier for consumers.
  • The state says the levy will help keep tabs on the revenue of sellers, who would be able to claim credit for the tax. The authorities feel this will ensure that disclosures are accurate and companies are paying the right amount of tax, said one of the persons cited above.
  • Tax experts said such a levy would increase the compliance burden on the companies.
  • Taxation of ecommerce companies has been in focus for some time, particularly after Karnataka questioned Amazon’s fulfilment centre model and sought to impose value-added tax on goods sold through the site, treating it as a commercial agent, a characterisation that the company has rejected.
  • Taking a cue from this, states such as Uttar Pradesh, Kerala and Delhi have sought to increase scrutiny on marketplace ecommerce platforms and made disclosure of monthly sales data mandatory for vendors registered with them.
  • Most ecommerce sites are structured as marketplaces that facilitate trades between buyers and sellers to stay in compliance with overseas investment rules. India does not permit foreign investment in business to consumer (B2C) ventures.
  • With ecommerce growing at a rapid pace in the country, state governments do not want to lose out on revenue. In most cases, invoices issued for online purchases show taxes levied, but states are not willing to take any chances as these companies have complex delivery structures.
  • Marketplace firms have argued that they only facilitate sales and are not sellers themselves, so they shouldn’t be dragged into the tax net.
Related Posts
MLA absenteeism the norm at successive Assembly sessions
The State Assembly Secretariat reveals a stellar performance by just three MLAs, all from the Congress S. Rafeeq Ahmed of Tumakuru city, B.M. Nagaraja of Siraguppa, and Prasanna Kumar K.B. ...
READ MORE
Karnataka Agri Business and Food Processing Policy 2015 in Karnataka Budget 2016
Karnataka Agri Business and Food Processing Policy 2015 is aimed at positioning Karnataka in a sustained growth path in the field of agricultural and allied sectors through global technologies and innovative ...
READ MORE
Poet, freedom fighter Kayyara Kinhanna Rai no more Kannada poet and freedom fighter, 101-year-old Kayyara Kinhanna Rai died at his residence at Badiyadkka in Kasaragod district of Kerala on August 9. He ...
READ MORE
The state Cabinet decided to abolish the Karnataka Goseva Ayog (Cow Conservation Commission) constituted by the previous BJP government in 2012. The panel was set up as part of the State ...
READ MORE
Karnataka: KAS personality test ratio goes up, 1:5
The state Cabinet on 22nd Feb decided to increase the ratio in shortlisting the number of candidates for personality test for gazetted probationers’ examination conducted by the Karnataka Public Service ...
READ MORE
Free Current Affairs Class
Register Here: http://nammakpsc.com/wp/sunday-manthan/ Time: 2PM to 5PM VENUE: BANGALORE SCHOOL OF CIVIL SERVICES, NEAR HEBBAL POLICE STATION, HEBBAL, BANGALORE. CONTACT: 9886151564/42103963
READ MORE
Karnataka – State Update- KAS / KPSC Exams – 27th March 2017
Karnataka Govt planning to hike quota ceiling to 72% Chief Minister Siddaramaiah on 26th March said that his government was exploring the possibility of increasing the reservation ceiling in education and employment ...
READ MORE
Case studies are designed to confront readers with specific real-life problems that do not lend themselves to easy answers. Many of the skills necessary to analyze case studies can become ...
READ MORE
Karnataka Current Affairs – KAS / KPSC Exams – 10th May 2017
150 acres of wetlands that can be preserved identified With advice from a retired professor and Indian Institute of Science researchers, the Karnataka Lake Conservation and Development Authority (KLCDA) has identified ...
READ MORE
All you need to know about President rule
In News: "A day before confidence vote, President’s Rule imposed" President’s Rule was imposed on Uttarakhand , a day before the Harish Rawat government was to face a test of strength in ...
READ MORE
MLA absenteeism the norm at successive Assembly sessions
Karnataka Agri Business and Food Processing Policy 2015
Karnataka Cabinet Okays Abolition of Goseva Ayog
Karnataka: KAS personality test ratio goes up, 1:5
Free Current Affairs Class
Karnataka – State Update- KAS / KPSC Exams
Approach To Ethical Decision Making
Karnataka Current Affairs – KAS / KPSC Exams
All you need to know about President rule

Leave a Reply

Your email address will not be published. Required fields are marked *