Amazon puts warehouse investments on hold till VAT issue resolution
E-commerce giant Amazon has put on hold future investments in itswarehouseoperationsfollowing queries raised by thecommercialtaxesdepartmenthere. TheKarnatakagovernmentis now trying to arrive at a solution soon on the value added tax (VAT) dispute with Amazon’soperationsin the state and the decision could be made as early as this month.
Aseniorgovernmentofficial told FE that they were expecting chief minister Siddaramaiah to take a decision and a meeting will be held sometime this month or the next.
Currently, a status quo situation prevails on the issue which began last year when Karnataka’scommercialtaxesdepartmentasked Amazon to pay VAT on behalf of sellers as it was acting as a commissionagent, an interpretation the ecommercecompanyhas disputed.
Thedepartmenthad also cancelled permissions given to some sellers who had registered Amazon’s FulfillmentCentrenearBengaluruas their additional place ofbusinesswithout disclosing it was a shared facility. “We are not precipitating anything,” said Karnataka’sfinancesecretary ISN Prasad, adding that there will be a meeting with the CM for a decision. It is not clear whether Amazon will be asked to participate in this meeting. According to thegovernment, no other ecommercecompanyhas a problem with the rules at present. “We understand the situation to be a case where the laws have not kept pace with the new-ageonlinebusinessmodels that enable a faster, convenient and nationwide access tocustomersfor sellers,” said an Amazon spokesperson.