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VAT made compulsory for e commerce platforms

Update On :05 September 2015

VAT made compulsory for e commerce platforms

On Friday, registering with Delhi's trade and taxes department and paying state sales levies have been made mandatory by the state tax department for all retailers carrying out transactions on e-platforms. It 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. Drawback of the new move could be higher prices for online products by unregistered retailers.

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.

A tax department statement said that the regulation measure was discussed with representatives from the e-commerce sector and their concerns and apprehensions have been addressed.

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.

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"Regulation made in the transactions of the ecommerce platform is a welcome approach as this will help the Government to collect more revenue."

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