The draft model law on goods and service tax (GST) has proposed bringing all online buying within the purview of the proposed levy. The move will end uncertainty over tax on purchases from e-commerce sites.
The draft bill has proposed tax collection at source for e-commerce, which means that any payment made to a supplier would be subjected to the provision at a notified rate. Experts said the inclusion of e-commerce under the ambit of the tax will pose a huge burden on these companies. “This will mean significant compliance burden on e-commerce companies as many of them deal with thousands of vendors. Further, this may lead to refund situation for many suppliers who operate on thin margin. In addition, e-commerce companies will need to file a statement providing details of all supplies made through this platform,” said Pratik Jain, indirect tax leader at the consulting firm. The government is proposing to cast the net wider by including several more players within GST.
Instead of a threshold of Rs 1.5 crore for central excise, the draft bill has proposed a Rs 10 lakh as threshold and any unit, service provider or retailer above the floor will be required to register and will be subject to tax. GST, which has been in the works for a decade, is seen as one of the most important tax reform initiatives post-independence.