The technology industry has taken a strong stand against the provisions in the new draft of the Goods and Services Tax Bill, which could have an impact on the growing startup and ecommerce industries, as well as hamper the IT services sector. According to the new draft, ecommerce sector will be troubled by the lack of clarity in the way “operators” and “aggregators” are defined, according to Internet and Mobile Association of India.
While it welcomed the new draft clarifying that the first point of transaction will be the point of taxation for ecommerce companies, it added that the Bill defines “aggregators” and “electronic commerce operators” (or ‘operators’) as two separate categories.
“Operators” are liable to pay tax according to the GST Bill, while aggregators are not. With the rapidly changing models of carrying out business online, grouping existing companies in straitjacketed definitions might be a difficult task. “The deeper challenge is the imprecise and overlying definitions failing to take into account the different business models that exist in this sector,” said IAMAI in a statement.
An “aggregator” is defined in the Bill as someone “who owns and manages an electronic platform, and by means of the application and a communication device, enables a potential customer to connect with the persons providing service of a particular kind under the brand name or trade name of the said aggregator”.
In the grey area are companies such as online classifieds naukri.com, online listing portals OLX.in and Quikr, online travel operators MakeMyTrip. com and Yatra.com, Ola and Uber. According to the GST Bill, these have characteristics of both and different business models have not been considered.
“Straitjacketing ‘ecommerce’ into poorly defined categories will stifle innovation, which will not only affect the fortunes of ecommerce companies but will also prevent better services for customers in India,” IAMAI added.
The Bill in its current form would also make life difficult for people in the IT services. “If the bill is passed in the same way it is currently envisaged… then people will be required to take as many as 100 different registrations and compliance and… a transaction which has been happening seamlessly across the country will have to then be somehow disaggregated and mapped on to states and how it is used so that it can be taxed accordingly,” R Chandrashekhar, National Association of Software and Services Companies told ETon Monday.
Online sellers welcomed the move to make marketplaces accountable, but asked for greater clarity on the issue of GST registration. In its current form GST gives advantage of the tax charged by the marketplaces only to the sellers having GST registration in the same state as the marketplace. Jay Ajayi Womens JerseyShare This