Shopping from Chinese etailers set to become more expensive

Mumbai: The government may introduce taxes and customs duties totalling as much as 50% on products ordered from Chinese ecommerce platforms, continuing a crackdown on the purchase of such goods.

India’s tax department may levy a blend of integrated goods and services tax and customs duty on products ordered from Chinese ecommerce companies to curb illegal imports. The tax would be levied on the buyers at the payment stage, two people familiar with the plan told ET.

According to the people, many Chinese ecommerce platforms were shipping goods ordered by Indians, claiming they were “gifts.” The authorities have been seizing such consignments, alleging misuse of rules that exempt gifts with a value of less than Rs 5,000 ($72.50) from customs duty.

Chinese retailers such as Club Factory, AliExpress and Shein could be affected by the government’s move, the people said.

“The government is looking to bring in payment gateways on board on the scheme and when the consumer pays the money, IGST and customs duty will be included in the price,” said one person.

The government hasn’t decided whether to impose one blended tax or separate taxes for various categories of products. Legal experts said a flat rate for all product categories may create problems.

“A flat rate for everything that’s purchased may lead to some technical issues,” said Abhishek A Rastogi, a partner at Khaitan & Co.

“There cannot be the same rate for different categories such as medicines and the amended higher rates should not violate World Trade Organization guidelines by slapping a flat rate.”

At its peak, about 200,000 Chinese products were shipped to India every day compared with about 1 million a day delivered by Indian online retailers including Flipkart and Amazon. However, the numbers from China started to go down after the government began cracking down on them in January.

Courier shipments worth Rs 100,000 or less to Mumbai airport fell 55% in Q1 of 2019. Mumbai received 50,713 shipments in March, down from 113,101 in December, according to a Bloomberg report citing a customs department document.