India’s leading association of traders and merchants, Associated Chambers of Commerce and Industry (Assocham) has complained that current definition and scope of e-commerce under Goods and Services Tax (GST) regime is ambiguous and unclear.
They have asked for greater clarity and transparency from GST Council when it comes to e-commerce transactions.
Earlier, various e-commerce firms had requested Govt. to keep them outside of GST regime.
In March this year, reports emerged that Tax Deducted at Source (TDS) has been capped at 1% under GST regime for all e-commerce transactions.
But doubts persists…
Commodities Trading Can Be Also Placed Under Ecommerce?
In a hard-hitting stand taken by Assocham, they have complained to Govt. of India and GST Council how the ambiguous definition of e-commerce under GST, and how it can be misinterpreted by anyone.
Stating an example, Assocham said that under the current scope, even commodity derivatives exchanges can be clubbed with e-commerce. This means that not only Flipkart and Amazon would be charged under GST, but also traders who are buying and selling commodities, using a digital platform.
In a statement, Assocham said, “E-commerce definition, as given in the Goods and Services Tax (GST) dispensation, has been left so wide that it could go well beyond Amazon or Flipkart marketplace platforms and may even cover the commodity exchanges..”
As per them, GST describes e-commerce as ‘all businesses where the supply of goods/services is through a digital or electronic network.’
Demanding clear cut definition and scope of e-commerce, they said, “There are distinguishing legal and operational factors between e-commerce operators and commodity exchanges. The commodities exchanges cannot be treated as electronic commerce operator in their legal capacity as well as in common parlance,”
In their letter to all Ministers and members of GST Council, Assocham has demanded transparency and clarity on the issue of GST for gems and jewellery, micro, small and medium (MSME) sector, exports, banking and telecom sector.
They also demanded replication of service tax exemption, which is currently offered for banking and nonbanking financial institutions. Currently, for some financial service providers, there is tax exemption for tax earned via interests.
We had recently reported that service tax under GST would increase to 18%, for some products and services.
Taxmen Will Hold Meetings For Categorization of Products/Services
Meanwhile, for the first time ever, tax authorities from Centre, and State Governments will hold a massive meeting, discussing a new ‘formula’ for calculating taxes under GST.
Although the tax slabs have already been finalised last year, it is still not clear as to which products should be placed in which slot. For example, the case of coconut oil, which is an essential food item in South India, but a luxury product in North India.
As per reports, the GST Council will meet on May 18-19, and before that, the tax authorities will hold several meetings to finalise the placement of products under the GST tax slabs.
An official said, “The fitment committee will start with deciding on tax rates on services. Since the Centre alone has the power to levy service tax under the current regime, fixing of the tax rate on services would be an easier task,”
Some speculations which can be finalised by the taxmen:
- Services were both VAT and Service Tax are being charged, would be placed under 18% tax bracket under GST
- Those services which attract only VAT of 12.5%, would be placed under 12% tax slab
- 60 services are right now exempted from service tax, which includes: religious pilgrimage, healthcare, education, skill development, journalistic activities. Decision would be taken on these services
- Services which are taxed under 15% service tax, such as transportation of goods/passenger by Indian Rail (4.5%), the supply of food in restaurants (10.5%), radio cabs (4.5-6%) and more. Decisions would be taken for these services as well.
We will keep you updated as we receive details regarding the tax structure for products and services, under GST.