GST to complicate Internet cos' biz; contradicts IT Act: IAMAI

Industry body IAMAI today said the proposed Goods and Services Tax contradicts the IT Act and will complicate things for Internet service providers as it makes them liable for the content posted on their platform.
"The provisions for intermediaries in the new GST bill are in clear contradiction with the provisions of 'digital intermediaries' as recognised by the IT Act, 2000.
"If the Internet economy is really expected to gain momentum, the government needs to address this inconsistency by reinstating the 'digital intermediary' and 'safe-harbour' provisions for the sector," Internet and Mobile Association of India (IAMAI) said in a statement.

IAMAI represents major Internet companies like Google, Facebook, Flipkart, Airtel Money and Linkedin among others.
The new GST bill clubs all intermediaries as 'agents' who 'carries on the business of supply or receipt of goods and/or services on behalf of another and clubs these entities together with commission agents, brokers, etc, IAMAI said.
Internet service industry provides technology platforms for third parties to host content on the Internet and are recognised by the Information Technology Act, 2000 as digital intermediaries who on behalf of another person receives, stores or transmits that record or provides any service with respect to that record.

Like blogs, YouTube, Facebook on which content is posted by public and these platform only provide platform for uploading, storing and transmitting content.

"A critical aspect of the IT Act is safe-harbour provisions under Section 79, which exempts liabilities of intermediaries provided the 'function of the intermediary is limited to providing access to a communication system' over which information made available by third parties is transmitted or temporarily stored or hosted'," IAMAI said.
It added that according to the new GST bill, digital intermediaries are no different from other types of business agents in the economy implying that Internet companies will no longer be eligible for safe-harbour provisions of IT Act and will be liable for the content hosted by the principals.

"For example, YouTube is a highly popular digital intermediary service that allows users to upload and share videos. As 'digital' intermediaries, YouTube only provides a communication platform and is not liable for the content, which is uploaded by users under safe-harbour provisions of the IT Act," IAMAI said.
The industry body said such provision would effectively stop free and easy hosting services that the platform offers.
"Similar restrictions would be applicable on other services like social networking sites, online marketplaces, etc. In short, doing business in India just got complicated for Internet service providers," IAMAI said.