Nasscom asks commerce ministry to direct states for unified e-commerce tax regime

Move follows Karnataka's decision to impose a one per cent additional duty for e-commerce businesses

National Association of Software and Services Companies (Nasscom) has asked the Union Commerce Ministry to direct states to have a unified taxation regime for e-commerce companies in the wake of Karnataka’s move to impose a one-per-cent additional duty for e-commerce businesses.

“We will continue discussions with the Karnataka government in this regard. Many states have adopted policies that do not have this negative impact. Hence, it’s important to have a uniform policy. We have requested the Ministry of Commerce to issue an advisory to states,” said R Chandrashekhar, Nasscom president, at the 18th edition of Bengaluru ITE.biz, the official technology summit of the Karnataka government, that began on Tuesday.

He explained that though the issue is within the purview of states, it is good to have some uniformity since these are not always intra-state transactions.

He also told state officials that the move would hurt the fledgling industry. “The difference in taxation that has been adopted by Karnataka is a bit of concern… Such an approach would not be conducive for continued growth of the segment.”

In October, Nasscom had said it would engage with e-commerce companies to make a representation to the state government about the proposed one per cent value-added tax (VAT) on e-commerce transactions in the state.

According to Chandrashekhar, ease of doing business in terms of regulatory and taxation policies and local market development as the thrust areas that government should pay attention to improve the start-up ecosystem in the country.

He said it was inappropriate to levy tax on a company that provides a platform to enable a transaction, rather than holding the whole inventory. “We will continue the discussions with the Karnataka government in this regard. Many states have adopted policies that do not have this negative impact.”

The state is home to two major online commerce players — Flipkart and Amazon India. Karnataka has been at loggerheads with global e-commerce giant Amazon over taxes on e-commerce transactions and ownership for these taxes. The state has asked Amazon to assume primary responsibility to pay taxes for merchants on its marketplace and register fulfilment centres as additional places of business, which the latter has opposed.