Ecommerce companies seek more time for 1% TDS levy

New Delhi: E-commerce companies have sought more time to implement a government proposal to levy a new tax, although they have, in principle, agreed to its imposition.

The ecommerce entities, including Amazon.com and Walmart-owned homegrown etailer Flipkart, have said they need time to upgrade IT systems in order to enable them to collect the 1% tax deduction at source (TDS) from sellers, a senior government official said.

“They’ve made representations, they're fine with the tax deduction plan, but they want the date to be at a later time...They want to upgrade their IT system, which will take time," the official said asking not to be named since the discussions were ongoing.

The income tax department plans to bring the unorganised sector into the tax net and widen the overall tax base. The move to tax e-commerce transactions at source was one way to reduce litigation, officials said. E-commerce companies said they were seeking more clarity on the new rule.

“Our sellers have voiced concerns that the deduction creates an unlevel playing field and will impact their cash flows and working capital. We worry that this would impact SMBs and their participation in the digital economy,” an Amazon spokesperson said.

“We are, however, committed to compliance, and are seeking clarifications from the government,” the spokesperson said, adding that building compliance requires substantial changes to seller and customer facing invoicing systems.

Flipkart did not respond to ET's queries as of press time Sunday.

The Internet and Mobile Association of India (IAMAI), which represents the online apps, reiterated that the proposed tax, which comes over and above a 1% tax collected at source (TCS) under the goods and services tax (GST), would be detrimental to the industry overall.