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E-tailers raise concerns over GST clause on tax collection at source 

The Hindu Business Line , Feb 10, 2017

Online retailers Flipkart, Snapdeal and Amazon today came together to raise concerns about the tax collection at source (TCS) clause under draft model GST law, saying it could result in a capital lock-down for sellers and discourage them from selling online.

This is the first time that the three companies have come together to voice their concerns on an industry issue.

Stressing that GST is one of the most forward-looking tax initiatives, the players exuded confidence that it will have a transformative impact on the sector.

However, the clause would lead to a capital lock-down of about Rs 400 crore a year and also discourage merchants from selling online.

In addition, it would result in a loss of an estimated 1.8 lakh jobs, putting a halt to the growth and investments in the sector.

Under TCS clause, e-commerce marketplaces will have to deduct a portion of the amount payable to sellers on their platform and remit it to the government.

Draft model

The draft model GST law is due to be finalised at the end of this month.

"We believe we have made a significant difference to the whole ecosystem... There are hundreds and thousands of sellers online and a lot of them are entrepreneurs, some of them are offline retailers... we have come a long way in creating this ecosystem," Flipkart co-founder Sachin Bansal told reporters here at a FICCI event.

"This is apart from the TCS issue. Our estimate is that at current scale, Rs 400 crore per annum of capital will be locked into the system that will not be accessible to sellers and will eat into the working capital of the sellers and will deter them from coming online and listing with us," he said.