According to some of the documents by a source, Walmart’s Flipkart and Amazon are among online retailers that are saying that the burden of compliance will hurt the fledgling industry and demanding India to scale back a proposed tax on third-party sellers on their platforms. If the proposal is approved by parliament in March 2020, then from April for the online retail industry on each sale made by sellers on their platforms, it will be compulsory to pay possible 1% tax. To counter a sharp economic slowdown due to weakening consumer demand and increase tax revenues, Prime Minister Narendra Modi’s government considers this move to be a part of a broader plan. But according to Federation of Indian Chambers of Commerce and Industry (FICCI) presentation prepared for the government, country’s fledgling e-commerce sector will be hurt by this tax.
On behalf of e-commerce companies, the lobby group said that along with increased compliance burden this move would cause an irreparable damage to the entire industry. He further added that this will also cause reduction in the trading activity. From April 1st or later the new tax would be implemented. Whereas, for Bengaluru-based Flipkart a spokesman said that the company has been working with industry chambers to highlight the increased cost of compliance and voice sellers’ concerns, Amazon has declined to comment. Finance Minister Nirmala Sitharaman, in an interview with TV channel ET now in February 2020 said that as taxpayers would have an option to offset it later, so the measure was not an additional burden.
Some third-party sellers are also pushing back against the tax, as they are already paying the countrywide sales tax. Although, online sellers or vendors whose revenue in the previous year is less than half a million rupees are subject to the nationwide sales tax, will be relieved from the new tax. The tax would be applied on sales on restaurant aggregators including Swiggy and Zomato and the income of drivers on firms such as Ola and Uber. The Finance Ministry said that 30 billion Indian rupees (USD 419.46 million) is expected to be collected in the capital through tax.