Govt mulls VAT on online trading : The Tribune India

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Govt mulls VAT on online trading

The flourishing online trade has become a bane of businessmen in the state.



Bhanu P Lohumi

Tribune News Service

Shimla, December 8

The flourishing online trade has become a bane of businessmen in the state. Thus, they have demanded Value Added Tax (VAT) on online sales. While the traders are losing business, the government is also incurring loss in revenue on account of online sales as no tax has been imposed on such trading.

“It is difficult to calculate the actual loss of business due to online trading but as per rough estimates, volume of online trading in Shimla district alone was more than Rs 100 crore in 2013-14 and the revenue loss to the government was about Rs 7-8 crore,” said Inderjit Singh, president, Shimla Beopar Mandal.

“The online trade is set to grow significantly during the current financial year as during the Diwali festival season, the sales of local businessmen dropped by 40 per cent,” he said. “Customers come to our shops to see the size and model of the article and order it online to save money,” he added.

Quoting an example, Inderjit said there was no tax on handloom products in Haryana, while the retailers in Himachal paid five per cent tax and were unable to compete as online sellers bought products from Haryana and sold these across the country at cheaper rates.

To overcome the problem, it should be made mandatory for every online trader to get Traders Identification Number (TIN) of Himachal Pradesh to check evasion of VAT as the trend of “cash on delivery” was picking up fast. This would also help in monitoring the sales and evasion of tax, he said.

Former president of the Beopar Mandal Romesh Sood said the shopkeepers dealing in readymade garment and cosmetic items were the worst hit as VAT on these items was 13.5 per cent, while no VAT was charged from online traders.

“There is a craze among the youth for online trading as they are computer savvy and find it convenient to buy goods of their choice,” said 31-year-old Ankur Verma, who feels that with mobile shopping applications, another dimension had been added to shopping. Further, the companies were publicising their products aggressively on TV channels, facilitating buyers to make a proper choice, he observed.

Joint Commissioner, Excise and Taxation, KK Sharma admitted that the government was losing revenue on account of VAT from online trading but it was difficult to calculate the exact amount as trading takes place outside the state. “We are proposing to impose VAT on online trade to check tax evasion and at present the department is making random checks on goods received through courier companies and recovering tax,” he said.

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