Govt defers TDS, TCS under GST to ensure smooth rollout

With just four days left for the rollout of GST, the government has deferred implementation of Tax Deducted at Source (TDS) and Tax Collection at Source (TCS) provisions as well as exempted from registration small businesses selling on ecommerce platform. Ecommerce companies will not be required to collect 1 per cent TCS while making payment to suppliers under the Goods and Services Tax (GST) which will be rolled out from July 1.

As per the Central GST (CGST) Act, the notified entities are required to collect TDS at 1 per cent on payments to suppliers to goods or services in excess of Rs 2.5 lakh. This provision has been kept in abeyance.

Based on the feedback received from trade and industry, the government has decided to postpone provision relating to TDS (Section 51) and TCS (Section 52) of the CGST/State GST Act 2017, with the objective of ensuring smooth rollout of GST, the finance ministry said in a statement.

Small businesses, with turnover less than Rs 20 lakh, will also not be required to register themselves under the GST for selling goods or services through ecommerce portal.

In other words, persons supplying goods or services through electronic commerce operator liable to collect tax at source would not be required to obtain registration immediately.

“This step has been taken to provide more time for persons liable to deduct tax at source/ecommerce companies and their suppliers to prepare for the historic tax reform,” the statement added.

The GST Network portal had started accepting registration of TDS, TCS deductors and ecommerce operators only yesterday. Given the huge rush, it is unlikely that all registrations would be done before the July 1 rollout date.

The biggest indirect tax reform since Independence, GST will subsume host of levies, including excise, service tax, VAT and other local levies. It will create a uniform market for seamless transfer of goods and services. GST is expected to widen the tax base, check tax evasion and add about 1-2 per cent to GDP.

Myntra EORS: Flipkart joins sale bandwagon; Cashbacks to ease supply chain pressure

The pre-GST fashion sale events were projected as Myntra VS Amazon (Fashion). But along with Jabong, the parent company Flipkart too joined its fashion arm’s End of Reason Sale (EORS). This is the first time the online marketplace has participated in Myntra’s flagship shopping event.

“With over 60% of Flipkart’s shopper base already shopping fashion on the platform, we are delighted to engage our shoppers with exciting offer constructs and keep them coming back for more. With the winning combination of big trends, bigger brands and biggest offers coming together, the End of Reason Sale will offer customers the best of fashion across categories – all in one place,” said Flipkart’s head of fashion vertical Rishi Vasudev.

In the EORS 24 – 26 June, Flipkart’s offers included:

• 50% to 80% off on over 3,000+ brands
• Brand Stock Exchange where the prices changed every hour as per the demand
• Cash-backs on domestics and international flights
• Flash deals
• The Late Night Show’, a special late night sale event that offered deals on men’s clothing, footwear and sports merchandise

Was the decision to join EORS pre-planned or was it a last minute move to foil Amazon’s plan for its End of Season Sale (EOSS), is not clear. But what’s evident is that Flipkart pulled out all the stops to use its fashionable advantage against its arch rival Amazon.

Cashbacks – Myntra’s strategy to take pressure off supply chain

Big sale event often puts immense pressure on ecommerce companies’ supply chain management. Delivery partners don’t get time catch their breath due to surge in sales. Myntradevised an innovative strategy to combat this problem.

The fashion etailer offered cash-backs to those customers who opted for delayed delivery. This not only helped to reduce logistic team’s burden but also the number of cancelled orders due to late delivery.

While speaking about this scheme, Myntra’s Chief Product Officer Ambarish Kenghe said,

“If you can take delayed delivery of 2-5 days, we will give you certain amount back. This is good for us since it will reduce delivery costs by taking a little bit more time to deliver it to customers. It will also simplify our supply chain and we will not have to deploy that much workforce.”

Besides the cashback scheme for late delivery, the Flipkart-owned fashion etailer also tied up with over 800 kirana stores for speedy delivery during EORS.

Premji Invest to Snapdeal: Give us clarity over merger with Flipkart

Is the Flipkart-Snapdeal merger jinxed? Because the acquisition deal has hit many roadblocks, ever since the negotiations began. Here’s the latest one.

PremjiInvest, a minority shareholder in Snapdeal has reached out to the marketplace seeking clarity over its acquisition deal with Flipkart. This is the second time that the private equity investment firm owned by Azim Premji has approached the Kunal Bahl-led ecommerce company.

Clarity over what?

Premji’s company highlighted two main concerns in its letter to Snapdeal. They are:

• The interest of minority shareholders and how it would get affect by the M&A
• The reason behind special payouts given to selected shareholders such as Snapdeal co-founders and early-stage investors

As per media reports, early investors Nexus Venture could get $80 million and Kalaari Capital $70-80 million. And co-founders Kunal Bahl and Rohit Bansal could get around $60 million.

PremjiInvest along with other small stake owners (accounting for 15% stake in total) are looking to collectively ask questions to Snapdeal before the deal gets finalized. The others include Singapore based Investment Company Temasek and Financial Planning & Investment Management firm BlackRock.

Sticky situation for Snapdeal

If you have been religiously following the Snapdeal-Flipkart merger updates, then you must be aware that it took a really long time to convince Nexus and Kalaari to sell the marketplace.

According to reports, the investors agreed only after they were assured a big cheque. Now this big cheque is creating problems because minority investors too want big cheques.

Seller lobby group has also asked the Indian government to intervene.  

On top of it, Snapdeal is running out of money, though it recently got some financial relief.

Would Premji and others agree soon? If so, then how many millions it would take to appease minority stakeholders?

Credit Suisse reaches out to Snapdeal’s minority shareholders

Investment bank Credit Suisse is reaching out to minority shareholders of Snapdeal to build a consensus on the sale of the ecommerce platform to larger rival, Flipkart. According to sources, Credit Suisse, which is advising Snapdeal on the proposed deal, is reaching out to smaller shareholders to get them on board for the acquisition.

The beleaguered firm has a number of investors including PremjiInvest, Ontario Teachers Pension Plan, Ratan Tata, Foxconn, Temasek and BlackRock among others.

Emails sent to Snapdeal and Credit Suisse did not elicit any response.

PremjiInvest — the personal investment arm of Wipro chairman Azim Premji and a minority investor in Snapdeal — had written to the company seeking greater clarity on the deal terms. It has also called for equal treatment of shareholders for payouts from the deal.

It has been previously reported that early investors, Nexus Venture Partners (NVP) and Kalaari — who also have Board representation — could receive payouts worth over USD 150 million once the deal is closed.

Snapdeal’s largest investor, SoftBank has been proactively mediating the sale for the past few months. The Japanese investment firm has already succeeded in getting Board members to agree to the said sale and a term sheet for due diligence with Flipkart has been signed. Snapdeal’s Board has representation from Snapdeal founders (Kunal Bahl and Rohit Bansal), SoftBank, NVP and Kalaari Capital.

The due diligence process is expected to be completed by month-end or early July. The deal between Snapdeal and Flipkart, if completed, would mark the biggest acquisition in the Indian ecommerce space.

One of the leading contenders in the Indian ecommerce space, Snapdeal has seen its fortunes failing amid strong competition from Amazon and Flipkart. Compared to a valuation of about USD 6.5 billion in February 2016, the sale to Flipkart could see Snapdeal being valued at about USD 1 billion. SoftBank has already written off over USD 1 billion on valuation of its investment in Snapdeal.

Private labels war – Sellers ask Flipkart, Amazon, ‘Are you marketplace or retailer?’

For online ecommerce biggies Flipkart and Amazon, private labels are the next battleground.Both have launched their own set of private brands across various product categories to become profitable.

Flipkart has eyes set on Big Billion 2017 and for the same, special emphasis is being put on its private brands. In one of his interviews, Adarsh Menon, VP & Head, Private Labels at Flipkart revealed the marketplace’s plans for its own label Smart Buy.

“Our plans for the next four months under the umbrella brand of Smart Buy itself…is to launch a very big range of home products and also some other important categories (including things like) selfie sticks, mouse, keyboard etc… All in all if we look at the umbrella brand of Flipkart’s Smart Buy the end of August, the brand would be present across 35 categories,” said Menon.

Amazon India too has labels like Amazon Basics, Solimo, Symbol and Myx. The US-based etailer wants to replicate the success of its private label strategy in India as well.

Should marketplace sellers worry?

If private labels would dominate the marketplaces’ product listings, then wouldn’t it affect the lakhs of third-party sellers? Sellers have the same concern.

In March this year, sellers’ lobby group All India Online Vendors’ Association (AIOVA) had approached Competition Commission of India (CCI) to express their displeasure against Flipkart and Amazon undercutting sellers.

“Marketplaces like Amazon and Flipkart are exploiting sellers sales and product information and sharing this with sister companies and their own private labels which is resulting in financial benefit to such parties. Ad properties and user targeting which is normally charged exorbitantly to sellers is doled out free to these parties, leading to unnatural reduction in cost of selling,” stated AIOVA’s spokesperson.

Needless to say, vendors are miffed

In the past, Flipkart and other marketplaces have avoided commenting on sellers’ concerns over etailers’ private brands. But this time Menon chose to reply.

He said,

“Ultimately the concern is that the consumer should be happy with the product. If somebody is there who has to worry about private labels, it is the people who are selling average or poor quality products online.”

Menon’s comment that implies ‘only vendors selling poor quality products should worry’ hasn’t gone down well with the online sellers’ community. It reflects that Flipkart has conveniently decided to ignore the questions related to predatory pricing, using sellers to extract data about consumers’ likes & dislikes and visibility. The Indian etailer has reduced these valid concerns to ‘only those with bad products have problem with our private labels’.

Indian Online Seller asked AIOVA to react on Menon’s statement. AIOVA’s spokesperson says to IOS, “Is Flipkart a marketplace or a retailer? Such statement clearly indicates future of sellers is not bright.”

Sellers, do you agree? Are you worried about Flipkart’s and Amazon private labels? And what would you like to say about Adarsh Menon’s statement?