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India’s proposed goods and services tax (GST) system should explicitly cover e-commerce sector and also spell out the tax treatment for cross border international transactions in the digital space, say tax experts.
It will be a mistake if India does not seize the current opportunity and explicitly bring e-commerce within the ambit of the proposed GST architecture, David Raistrick, Global Managing Director-Indirect Taxes, Deloitte told Business Line here.
There is also a specific need that proposed GST framework cover cross-border (international) movement of goods and services through e-commerce space, Raistrick said.
Currently, India does not have any specific laws to regulate the e-commerce sector and the various tax laws does not have any enabling provisions to cater to the complex and rapidly evolving e-commerce space.
Prashant Raizada, Partner-IndirectTaxes, BDO India LLP, a professional services firm, said the proposed implementation of dual-GST could be a big boost for e-commerce sector.
This may not only alleviate the existing challenges but also bring about significant efficiencies to the e-commerce sector, giving them a much more competitive advantage vis-à-vis brick and mortar stores, Prashant said.
One of the principal issues would be the Rules for place of supply of services by the e-commerce players to the vendors under the marketplace model, he said.
“The much larger challenge under GST would be taxation of supplies of digital goods and services (goods supplied over the internet such as books, music etc) by the e-commerce players”, Prashant said.
Value Added Tax (VAT) on electronic commerce seems to be a challenging issue even for matured economies such as European Union, which is now coming up with a new set of rules governing ‘VAT on Electronic Services’ to come into effect from January 1,2015, he said.
The e-commerce sector in India has off late been facing challenges on the State VAT front with some notices being issued by Karnataka VAT authorities to one of the leading players.
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