Amazon and Flipkart are causing a loss of GST revenue and income tax to the government, the Confederation of All India Traders has alleged.
The trader body, which has launched a two-month-long agitation against the e-commerce platforms, said in a release that the two platforms have designed their business models on predatory pricing and deep discounting, due to which they were charging GST on the “artificially lowered” price. “...as per GST law, they cannot undervalue the price of any commodity and under a statutory obligation to charge GST on actual market value,” it stated.
CAIT alleged that since the GST was being charged on the price that the good is sold rather than on its market price, it is in turn causing a loss of GST revenue to the government. The body further added that it ‘regretted’ that no authority took cognisance of the issue. The move by the e-commerce companies, they alleged, is destroying the offline business system due to an uneven playing field.
CAIT further went on to say that the two companies, who have been registering huge losses, are also avoiding Income Tax obligations in the method and despite such huge losses, are able to remain in the game.
They demanded that a high-level enquiry be initiated into the companies over avoiding tax liability. “Since FDI is governed by the FEMA and Reserve Bank of India, it is demanded that another enquiry may also be initiated on pattern of receivable funding and its disbursement,” it stated.
On Monday, CAIT held a protest march in which over 10 lakh traders from over 500 districts across the country participated and submitted memorandums to District Collectors in the name of Prime Minister. The traders demanded that the companies be barred from conducting business.
CAIT began its protest against e-commerce companies on November 23 and will go on till January 10, 2020. The protest was announced on the allegation that the two companies are circumventing the law and was in violation of Press Note 2 of the FDI policy.
In India, marketplaces funded through FDI are only allowed to make their platform available to third-party sellers, and bars them from holding any inventory or selling their own goods to customers. If an online marketplace sources more than 25% of merchandise from any entity or seller related to it, that seller will be considered controlled by the marketplace. Marketplace operators are also barred from selling products of any of their group companies.
The first phase of the nationwide agitation will conclude with a three-day National Traders Convention to be held from January 6-8, 2020 at New Delhi, which will be attended by trade leaders of about 20,000 trade associations from all over the country.