Alibaba Will Ban Sellers Who Evade GST In India; Crackdown On Chinese ‘Gifts’ Continue

E-commerce has made everything so easy and convenient and everyone is ordering something or the other from these online shopping portals such as Flipkart, Amazon, Snapdeal. Some other giants of this industry are Alibaba, Club factory, and Shein.

Well, not anymore.

Indian Government has ordered a clampdown on these three portals due to fraud.  

People order from such websites as they offer products at unbelievably cheap rates. For people who have no clue who or what Alibaba is, it is a portal where all sorts of electronics are available apart from other products like beauty, fashion garments, packaging and printing facilities and many more.

Club Factory and Shein offer fashion garments and shoes and accessories for women at great rates too.

Indian GST Rules and Chinese Discrepancy

When such products are imported into India by these Chinese sellers, they are eligible for GST. But, portals have shrewdly found out a way to escape paying the GST – which, unfortunately, did not miss the Indian Government’s sharp eyes.

As per the existing rules and regulations of GST, the Indian Government exempts gifts of up to Rs5,000 from the GST duties. This rule by GST was for the Non-resident Indians to send gifts to their relatives and friends in India.

To waive off GST, Chinese sellers send large shipments of products into India by marking them as ‘gifts’.

As this encouraged the honest Indian retailers and e-commerce websites, they asked for strict action to be taken against such fraudsters. The government promptly responded, ordering a clampdown on the import of products from Chinese sellers. Officials also said that this will also affect the smuggling of illegal food products and spurious cosmetics in India.

Alibaba Takes Action

Aliexpress – the online retail business of Alibaba – said in reports that they respect Indian norms and will crack down on any sellers that are finding loopholes to avoid paying the eligible GST. the said sellers may also be forced to close down.

They also clarified that many such sellers have already been penalized for stooping so low to avoid taxes.

A spokesperson from Alibaba said, “AliExpress, as a marketplace, respects local regulations and laws and forbids any illegal activities by sellers on its platform. AliExpress has strict measures in place to take action against items that contain descriptions that encourage tax avoidance. Any infringing sellers found on the platform face penalties including store closure.”

Government’s policy to be stricter?

These are the steps to be taken by the Indian Government to avoid such frauds in future:

• Limiting the value of imported gifts to INR 5,000 ($71.5) per Aadhaar number. This will help keep a watch over the purchase of goods from foreign online portals.This limit can also be used via any KYC and not only through Adhaar number.
• A complete ban on such products was considered, but the Department Of Industrial Policy & Promotion (DIPP) has suggested limiting such imports to four per person in a year.