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The continuing impasse over the issue of tax collection from e-commerce companies such as Flipkart and Amazon has resulted in loss of up to ₹2,000 crore for the Karnataka government.
Participating in the Budget discussion in the State Assembly, HD Kumaraswamy, Janata Dal Secular (JDS) leader, said, “The State government instead of resolving the tax issue and bringing e-commerce companies under the tax net has lost an opportunity to collect ₹1,500-2,000 crore in taxes from them.”
In another development, Commercial Tax Commissioner Ajay Seth, who was in charge of e-commerce companies, has reportedly gone on leave.
Kumaraswamy further said Bengaluru, which has become a major hub for commercial tax collection, has around one million households who regularly buy their needs through 132 portals that are in operation in the State.
E-commerce companies are active in the State through registered vendors and the vendors pay tax of 14.5-15.5 per cent, but not e-commerce companies as they claim to be mere facilitators, Kumaraswamy said.
Value-added tax“When e-commerce companies were subjected to tax under Karnataka Value Added Tax Act, 2003, the then UPA government at the Centre intervened asked the State government to go slow,” he said.
“After going slow since July 2014, now the concerned commercial tax commissioner, Ajay Seth, has gone on leave. I do not know if it is deliberate that the State government has sent him on leave,” Kumaraswamy added.
Ever since e-commerce companies were brought under the ambit of VAT, the State government is under pressure from various stakeholders to quickly resolve a tax dispute especially with the online retail giant Amazon, but the Karnataka Chief Minister is yet to move to resolve the issue.
At present, the State government has classified all e-commerce businesses under the Section 8 and also as per the definition of a dealer under Section 2 (12) of the Karnataka Value Added Tax Act, 2003 and expects Amazon to fall in line and pay the tax accordingly.
Section 8 defines that every person who, for an agreed commission or brokerage, buys or sells on behalf of any principal who is a resident of the State shall be liable to tax.
As per Section 2 (12), a dealer means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise for cash or for deferred payment or commission.
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