Amazon

In tax tussle, industry backs Amazon India

 

 

 

 

BANGALORE: Indian industry has reacted strongly to the ongoing tax related hurdles faced by US e-tailing giant Amazon in Karnataka, and called on the state government to remove impediments to the growth of e-commerce.

Bangalore is home to India's e-commerce poster boy Flipkart and is the India headquarters of Jeff Bezos' Amazon, companies that have together lined up cumulative investments of $3 billion into what is one of the fastest growing consumer sectors in the country.

R Chandrashekhar, president of IT industry body Nasscom and former Union telecom secretary, said the government should do what it can to catalyze the growth of e-commerce, a sector that brings efficiency to the market.

"The industry increases the pace of economic activity. To realize that benefit, we need to work on regulation, taxation, infrastructure, and also on the innovation ecosystem in the country," he said. Nasscom would soon unveil case studies that show how disruptive technologies used in the e-commerce industry can dramatically impact economic growth.

Tax authorities in Karnataka have raised objections to the way Amazon India and its sellers file their tax returns while operating out of the former's warehousing facilities, located on the outskirts of Bangalore.

HV Harish, partner in Grant Thornton India and past president of Bangalore Chamber of Industry and Commerce (BCIC), said that new businesses (like e-commerce) haven't been envisaged in our tax system.

Arvind Singhal, chairman of retail consultancy firm Technopak, said the government must sit down and draw a tax framework for the e-commerce industry. "At present, there is just no clarity on the subject. I don't think this has been intentionally done as central government and various state governments are supportive of the e-commerce sector," he said.

In June, M Veerappa Moily, the Congress MP from Chikkballapur, wrote to the state government cautioning them that Maharashtra could benefit in the eventuality of e-commerce operators pulling out of the state.

"I understand that the e-commerce industry in Karnataka is facing certain setbacks. In view of the obstacles, the business (industry) has been thinking of shifting base to Maharashtra," Moily wrote in his letter, a copy of which is with TOI.

Given the large tech workforce in the city and state, who are at ease shopping online, Bangalore and Karnataka have emerged as one of the top three sales markets for e-tailers in the country. Bangalore is the largest revenue generator for some of the niche furniture e-tailers.

The state finance department has issued notices to some 50 of Amazon's vendors to stop supplying products to the company. It has also asked the vendors not to store their products at Amazon's warehouse, located in Moily's constituency.

Tax authorities have objected to VAT not being collected by the warehouse facility and vendors designating the facility as "an additional place of business".

"When and who pays the tax has to come from interpretation of law," said Harish.