It seems that Government has finally woken up to the fact that eCommerce business does not fall into boundaries of traditional brick and mortar businesses’ legal and regulatory norms.
Due to lack of specific regulatory framework there had been numerous incidents concerning ecommerce companies, where various authorities and tax officials were clueless about the course of action to be taken. At the same time, some ecommerce companies have been taking advantage of gray areas that exist is current framework.
eCommerce is a new age business, and while it offers many advantages to the consumers, the way it functions is quite diverse and complex, as the activities of ecommerce companies do not have any restriction of geographical boundaries. For example, a consumer sitting in Delhi can order from a ecommerce site that has registered office in Karnataka (or in Singapore), and the actual site from where consumer orders is hosted on servers outside India. The product that has been purchased is then shipped from a warehouse which is in Maharashtra. To add to this, ecommerce site is just a platform (a marketplace), where the real seller of the product is from Rajasthan!
In such a situation, the traditional way of tax collection is completely thrown out of the window! There is absolutely no clarity on who will pay taxes, and laws of which state will be applicable.
For ecommerce site, they generally take advantage by operating out of places which has lowest taxes!
Currently, there is no single law in the country to regulate, monitor and supervise e-commerce. Also, what is making monitoring a very difficult task is the lack of a mechanism of registration/licensing of online retailers!
According to ToI report, department of consumer affairs has presented a proposal for final consideration in front of Committee of Secretaries (CoS) that could bring e-commerce under the purview of up to nine government departments.
The proposal has said that these 9 govt departments will oversee different areas of ecommerce business – Here is what they propose.
- Ministry of IT and Telecom: They will handle data protection, cyber security and issues related to registration of server and websites.
- Revenue Department: They will handle taxation related issues.
- Reserve Bank of India: They will look into banking and foreign exchange issues.
- Consumer Affairs Department: They will take care of consumer protection issues
- Commerce and Industry ministry: They will handle Foreign investment and trade policy
- Home / Finance / Corporate Ministry – They will look into ecommerce related criminal frauds
- Information and Broadcasting Ministry: They will take care of advertising norms and related matters
While we are glad that Government is taking concentrated steps to ensure clarity and transparency in ecommerce business, they also need to keep in mind that they don’t go overboard with it. By bringing in far too many departments into picture they should not make it difficult for ecommerce businesses to operate.
In our view, rather than having so many departments policing ecommerce activities, they should come up with a separate unit that will handle various aspect of these new age businesses.
Regulatory measures in e-commerce is essential one as every transactions goes online. Government departments that are alloted should monitor properly. So that issues that happens in e-commerce sector can be corrected.
Merlin
Ecbilla E-commerce portal.