Online buys may get costlier as Delhi slaps VAT

NEW DELHI: All retailers carrying out transactions on e-platforms such as Flipkart, Snapdeal and Amazon will now have to register with Delhi’s trade and taxes department and pay state sales levies.
The move by the state tax department on Friday is likely to make major e-commerce companies more vigilant while listing the sellers on their platforms. With most e-commerce marketplaces aggressively competing


 with each other to attract retailers, they have tended to be lax about whether the sellers have registered for VAT or not.
One fallout of the new move could be higher prices for online products. “The retailers who are not yet registered with the government may increase the prices of their goods because they now have to mandatorily pay VAT to the government,” said the founder and CEO of a leading online marketplace.
Although the e-platforms themselves have been exempted from the tax framework for the time being, they will have to file online declarations on transactions carried out by the sellers. Non-compliance will attract a penalty of Rs 50,000 under the Delhi Value Added Tax Act, 2004.
The regulation measure was discussed with representatives from the e-commerce sector, and their concerns and apprehensions have been addressed, a tax department statement said.
When contacted for a response, a Flipkart spokesman said, “We follow all the necessary screening requirements before listing a seller.” Snapdeal did not comment.
Traders do not want to file VAT forms online
The Delhi government had been contemplating the regulation of online trade for some time as e-commerce is a rapidly expanding segment. Regulation of online trade is also seen being seen as a move by the government to garner more revenue, some of which was leaking from the system.
The notification said, “To regulate the dealers/sellers engaged in the selling of goods through online portals, the trade and tax department has made it mandatory for them to deposit the due tax they owe to the department and to file information online with regard to transactions made by such sellers/traders through their portal. It has also made mandatory for all e-commerce companies/firms providing e-platform facility to file information online with regard to the transactions made by such sellers/traders.”
An online marketplace executive said, “Sellers need to realize they can’t escape the tax net now.”

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