File Transaction Details, Delhi Government to Ecommerce Companies

After several tax evasion cases resurfaced, the Delhi Government has instructed all ecommerce companies to file the details of transactions carried out by sellers and traders through their platform. The Department of Trade And Taxes has made it compulsory for marketplaces to reveal transaction details while paying taxes.

While explaining what prompted the department to take this step, an official revealed, “In the financial year 2014-15, it came to our notice that some ecommerce companies selling goods through online portals were not depositing their due tax that they owe to the department. They used to collect tax from the consumers but did not deposit the money with government.”

Needless to say, this measure is taken to bring etailers and online sellers under tax regulations and curb tax evading practices. Ecommerce companies will have to furnish basic seller details by logging on to website of the Department -www.dvat.gov.in.

Those who won’t pay heed to this instruction will have to shell out penalty. As per the official, “Non compliance of the notification shall be treated as violation, which attracts penalty of Rs 50,000, under section 86(14) of Delhi Value Added Tax Act, 2004.”

This is a sensible step, we think. Why?

Marketplaces have been stating from long that they are facilitators and not sellers, when asked to pay huge taxes by the government. The sellers are supposed to pay the same, etailers insist. But the government can’t keep tab on each online seller’s transaction nor will it be fair to ask marketplaces to pay the entire sum instead. So with this move, the responsibility of paying tax falls on the one who is making sales. This will help to avoid the Amazon- Karnataka government sort of situation.

Like Ashish Chandra, General Counsel at Snapdeal said, “We earn only 4-5%. If you ask us to pay 16% tax which should be paid by the seller, who will do an e-commerce business in India? Thankfully with all the intervention from the e-commerce companies, there are three states (Delhi, Kerala and Rajasthan) which have a legislation which says that ecommerce companies are not sellers. They’re service providers. The only thing they have to do is provide the information about sales on the sites, and then the duty is of the government to do any reconciliation. That’s the right way to legislate.”