In a rare sight, top bosses of country’s major e-commerce players – Flipkart, Amazon and Snapdeal shared dais to raise their concerns over the draft Model GST Law.
The draft proposes a clause called ‘Tax Collection at Source’ (TCS – Section 56). Under this, e-commerce marketplaces will have to deduct a portion of the amount payable to the seller of goods/services and remit it to the government.
E-commerce players in a joint statement argued, “This step will alienate the very rational behind the success of the marketplace model that allowed online sellers to achieve fulfilment efficiencies. The e-commerce industry collectively feels that a thorough impact analysis of TCS on the sector has not been carried out diligently before initiating the move.”
Voicing his concerns, Snapdeal’s Kunal Bahl said, “This is for the first time these 3 companies are coming together for this serious issue. E-commerce is building platform to perform locally and sell nationally. It helps in streamlining the supply chain so the seller gets much more margin and people gets products for much lesser rate.”
“E-commerce is vociferously for GST. It’s at an interesting confluence of ‘Make In India’, ‘Digital India’ and ‘Start-Up India’. E-commerce is investing in infra to benefit the sellers, TCS hampers that. Success of the industry is contingent up on the success of small businesses.” Adding to the sentiment, Flipkart co-founder Sachin Bansal said,
“none of us is saying that GST is bad, it is a transformative step for e-commerce, but tax collection at source is an area of concern in GST for e-commerce.” “Due to TCS, close to Rs 400 crores per annum of capital will be locked into the system and it will hamper working capital,” he added.
Amazon’s Amit Agarwal said “TCS can change the growth trajectory of e-commerce, and that is a cause for concern. It is an exception created for online, it isn’t there for offline.”
The e-commerce model is built on efficiency of the cash conversion cycle. The more number of conversions that capital can perform the higher the profits and revenue for small and medium businesses. With TCS, capital will be locked away for periods between 20-50 days depending on the transaction date.
FICCI Secretary General Dr A Didar Singh also said that “e-commerce created the first national market of the country, GST just enhances that.”
Source: Money Control
Image Courtesy: The New Indian Express
