The Indian government is upping the ante in the case of imports through online purchases from Chinese ecommerce platforms. As per an Economic Times report, a duty or IGST imposition on such purchases is being contemplated to arrest the malpractice that customs offices in Mumbai, Bengaluru and Delhi have observed. The matter has been on the agenda of the customs department, particularly the Mumbai Customs for many months now.
It all started with some local retailers registering a complaint with the authorities that some traders were ordering products on sites like Club Factory, Ali Express and Shein at very low prices and selling here. These orders attracted no duty when imported since these traders managed to call them ‘gifts’ of individual value less than Rs 5,000, which is exempt from duty.
The Customs swooped down on the traders’ premises and seized the goods. There are reports that the traders have now shifted their clandestine activities out of Mumbai to other cities where the Customs may not be as vigilant.
It is under these circumstances that this report comes in of the government considering introducing a tax on such products. The rate of tax may be as high as 50% and it could either be a composite flat rate or a combination of IGST and Customs Duty. If this is indeed implemented the trade through this rate will definitely become unviable for those engaged in the transactions now.
The report on this development adds that the government will bring the payment gateways on board ensuring they collect the levy at the time of the customers making the payments and checking out of these sites.
There are experts who feel the government may have to have differential rates and one flat rate for all items bought may become impracticable to implement. Levying the same rate for different categories may also violate World Trade Organization guidelines.
The consistent efforts of the Mumbai Customs seem to have paid off since courier shipments to Mumbai airport having value ₹1 lakh or less have dropped by over 55% in the first quarter of this financial year.
The concerned Chinese companies have been denying that they are involved in doing anything illegal. Some have already opened their Indian ventures to import the products themselves and sell locally, which would be perfectly legal.