Karnataka Government Must Remove Tax Hurdles for Amazon Traders: Nasscom

The Karnataka government should facilitate the growth of e-commerce by removing tax issues faced by dealers of global e-tail major Amazon India in selling goods in the state, a top IT industry representative said Wednesday.

"The Karnataka government should remove impediments in the growth of e-commerce and be a catalyst for economic growth in the state," National Association of Software and Services Companies (Nasscom) president R. Chandrashekhar told reporters in Bangalore.

The industry body official made the observation in light of the state commercial tax department recently issuing notices to about 50 dealers selling products on Amazon India's online marketplace without paying value added tax to the state exchequer.

The department has also directed the third-party dealers to stop using Amazon's warehouses for storing their goods, which are shipped to buyers on placing purchase orders on its online platform.

Though Amazon claims to be only a service provider facilitating sale of goods between a dealer and buyer and hence not liable to pay any tax, since it does not own goods at any point of sale, the state tax department, however, insists that the e-tailor should also pay sales tax on all orders placed through its online platform, as the goods are stored and shipped from its warehouses.

(Also See: Traders Move Against Flipkart, Amazon for Selling Below Purchase Price)

"As e-commerce brings efficiency in the market and boosts economic activity, its players should be encouraged for the benefit of all stakeholders, including manufacturer, dealer, facilitator and end-user," Chandrashekhar asserted.

Noting that broadband and online services contribute two percent growth to the national gross domestic product (GDP), the former telecom regulator said a Nasscom study had revealed that use of technologies would have dramatic impact on the country's economic growth.

"All the stakeholders have to work in tandem on regulation, taxation, logistics, infrastructure and the entire ecosystem to reap the benefit of technologies, which create services like e-commerce with new business models," Chandrashekhar noted.