Ecommerce platforms Amazon India and Flipkart have sent out missives to the government to reconsider the tax deduction at source (TDS) for third party sellers on their platforms.
Industry bodies including Internet and Mobile Association of India (IAMAI) and the Federation of Indian Chambers of Commerce and Industry (FICCI), in their submissions to ministry of finance, pointed out that the implementation of 1% TDS from sellers during transactions will create working capital irregularities and compliance burdens.
The clause for 1% TDS was announced in the budget 2020 under Section 194-0.
“Deduction of TDS, over and above TCS (tax collected at source) deduction under GST, is yet another compliance on digital platforms that are not applicable to their offline counterparts, which worsens the regulatory bias against online platforms,” said IAMAI in its submission to the ministry. It further said that the imposition of TDS will make it difficult for medium and small enterprises to expand their business through online platforms.
The association asked the government to reconsider the timeline of April 1, 2020, for compliance on the same.
Earlier this month, Amazon India head Amit Agarwal had said that implementation of the TDS clause will lock in working capital for small sellers.
According to a report by Reuters, FICCI and lobby group US-India Strategic Partnership Forum (USISPF) also asked the government to reconsider the decision and extend the timeline for compliance.
On the other hand, traders body Confederation of All India Traders (CAIT), which has been vocal in its demand with the government to investigate alleged violation of Foreign Direct Investment guidelines and Competition Act 2002, has asked the government to investigate GST avoidance by the ecommerce players.
“Soon a delegation of CAIT will meet the finance minister Nirmala Sitharaman to push for investigation for avoidance of GST tax revenue by e commerce companies particularly Amazon and Flipkart. We will submit evidence to the Finance Minister to substantiate our allegations, “ said a statement by CAIT.