Budget silent on e-commerce

The e-commerce sector failed to find a place in the Budget for 2015-16.

Measures proposed on taxation or start-ups may benefit online retailers, but there were no sector-specific measures for the sector. Sectors that made it to the budget over e-commerce were leather footwear, which received a reduction in excise duty; incense sticks, which received some exemptions from excise duty; yoga, which was included in the ambit of charitable purpose; and gutkha, which saw an increase in excise.

“The budget was mostly silent on e-commerce,” said Dinesh Agarwal, founder and chief executive officer of IndiaMART.

“There was no clarity over tax on e-commerce transactions across states.”

The closest that Finance Minister Arun Jaitley came to mentioning the e-commerce industry was when he spoke about startups and the need to nurture them. However, experts believe even the measures that were announced for startups were unlikely to be of much relevance to online retailers.

Several large online retailers said they did not have “much to say about the budget”. “We looked at the budget really closely, and there was nothing for the e-commerce sector,” said an executive of a prominent e-tailer requesting anonymity.

The one announcement that brought cheer to e-tailers was the government's commitment to rolling out the goods and services tax (GST) from April 1, 2016. This will bring some respite to an industry that has been battling archaic tax laws.

“The assurance to speed up GST is a welcome announcement for the industry as it will boost the country's manufacturing competitiveness,” said Radhika Aggarwal·, co-founder and chief marketing officer at ShopClues. “The budget has reinforced the government's progressive and liberal stance that will fuel growth and global investors' sentiment for In··dia.”

Aggarwal, however, added the decision to raise the service tax to 14 per cent could be a damper for e-commerce. Some experts raised concerns over the fact that the GST rollout had been delayed by several years.