Sector specific provisions required in GST: Report

The Dollar Business Bureau

In Goods and Services Tax (GST) framework, sector-specific provisions are required to create transparency in treatment of tax in transactions of online marketplace, a report said on Thursday.

"GST, which is based on the concept of ‘one tax, one market’ should be a welcome initiative for online marketplaces. To form clarity with regard to treatment of tax on online marketplace transactions, sector-specific provisions are required to be implemented in the GST regime," said the report jointly released by PwC India and Internet and Mobile Association of India (IAMI).

"The firms will need to follow the approach of whole of business for impact assessment and implementation of GST; in which business and tax advisory teams can together work to offer a smooth service to customers that include all essential aspects of business. Only then the online marketplace sector will be able to use its full potential," it said.

As per the report, the ever-evolving and complex environment of online marketplaces, comprising numerous transactions and parties across countries, is giving rise to a lot of issues related to tax and regulations in India as well as other countries.

Since the implementation of GST regime will impact the very basics of how business is done in India, it is necessary to focus upon the effects on online marketplaces.

The report said that if the rules formulated under GST regime put obligation on e-commerce companies to reveal and give information, the provisions need to be friendly for the assesse and not be rigid so as to put severe penalties or prosecute the e-commerce players.

The report also suggested that online marketplaces should be liable only to pay taxes on the service fees earned by them.

The rate of tax should not be above 18 percent, should remain uniform all over the country in the wake of the concept of ‘one tax, one market’, it added.