Tax Collected at Source (TCS) for e-commerce is an unfair liability imposition on the ecommerce sector and will create operational challenges, the Internet and Mobile Association of India (
IAMAI) has said in a statement on Thursday.
It has also pointed out that online marketplaces, as recognized by the IT Act 2000, are intermediaries only providing a technological platform and are not actually engaged in the act of retail trade. “Mandating technological platforms to collect Goods and Services Tax (GST) for retail activities undertaken by sellers on-boarded on their platform is a contradiction of the intermediary role played by such platforms; and a forceful imposition of undertaking tax liabilities for activities beyond their remit,” IAMAI said.
The government has said ecommerce companies such as Amazon and other foreign companies operating in the ecommerce space will have to register themselves for goods and services tax (GST) in all the states in the next 10-12 days as they need to collect tax at source from October 1.
The industry has pitched for single registration in place of multiple state registrations as it would increase their compliance costs, but the government has so far maintained that they need to register in all states. Industry is pinning hopes on government permitting single registration.
The industry lobby body has said that TCS mandates all sellers to register under GST even if they are under the income threshold. “Start-up online marketplaces now face greater challenge to onboard MSME (Micro, Small and Medium Enterprises) sellers on their new platforms because of the mandatory registration for online sellers as mandated due to TCS,” said the statement. It added that an immediate notification with less than a month for compliance is too short a notice for businesses to implement the provision.
“Forceful implementation of TCS without proper clarity will create chaos for the seller community and will be a major roadblock for e-commerce transactions.”
Under the provisions, notified entities have to deduct up to 1% state GST and 1% central GST on intrastate supplies of over Rs 2.5 lakh. In the case of interstate supplies of over Rs 2.5 lakh, TDS will be 2% integrated GST. These provisions are aimed at checking tax evasion as TDS/TCS will leave a trail of transactions. In the case of foreign ecommerce platforms, there will be no TCS liability if the seller is based outside India.