Tax laws need to keep pace with the challenge posed by e-commerce to ensure appropriate taxation, said a joint study released by Assocham and Deloitte India.

The report said that the government’s proposed Goods and Service Tax (to be introduced by April 2016), should be a modern tax to cover additive manufacturing, eliminate the anomaly of double taxation on software and address issues faced by e-commerce companies.

Some of the other key challenges for e-commerce businesses include supply chain.

Logistics in e-commerce business are highly complex to manage in a vast country, where infrastructure is not well developed to reach to remote regions, said the study titled “Future of e-Commerce: Uncovering Innovation.”

Deep pockets

In a statement, Hemant Joshi, Partner, Deloitte India’s TMT leader said, the global players like Amazon and Alibaba have deep pockets to rely on their parent companies for continuous funding support.

The home-grown players would definitely need different metrics to preserve the investor confidence build in the sector, he added.

The study said that newer technologies that could significantly bring a paradigm shift in the online businesses are analytics, autonomous vehicles, social commerce, and 3D printing.

Companies have started to invest in data analytics to gain real-time insights into customer buying behaviours, and thus, offer personalised user experience.

The e-commerce companies are building communities on social media networks to better understand customer needs and to drive effective marketing strategies.

Indian digital advertising market is expected to cross the ₹367.5-crore mark by April end, the study added.

Brands are taking to digital medium as digital ads are flexible and can be adapted for any device and have the two-way interactive capability, the report said.

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