Delhi VAT move may not hit online shoppers

The Delhi government’s decision to make it mandatory for all retailers, supplying to e-platforms such as Flipkart, Snapdeal and Amazon, to register with the trade and taxes department and pay state sales levies, is unlikely to increase prices of online products.

The state government aims to regulate online dealers and sellers. According to the directive, sellers would have to pay due taxes, along with their transaction details.

According to Flipkart, to become a seller on its site, retailer should have a registered business, along with the mandatory documents such as PAN, VAT id, TIN and TAN id. “We have been following these norms since the beginning, so there's no reason that the prices of listed products would increase,” said a Flipkart executive. Snapdeal did not comment on the issue.

Even retailers believe the decision might not have an impact on prices. “It need not necessarily lead to an increase in prices of online products, as these are the taxes a seller has to anyway pay,” said Kumar Rajagopalan, CEO, Retailers Association of India.

While e-platforms at present are exempted from tax framework, they will have to file online declarations on transactions carried out by the sellers.

Rajagopalan added that sellers need to be aware of tax implications.  “Online marketplaces are just enablers, so it is for the sellers to be aware of the tax implications,” Rajagopalan added.

The Delhi government took this decision after it noticed that in 2014-15, some e-commerce companies were not depositing tax. A senior official in the government claimed that though the tax was collected from consumers but never deposited with the government.