Frequently seen making veiled remarks against each other on social media platforms, the three heavyweights of e-commerce sector showed solidarity on the issue of tax collected at source (TCS), proposed in the draft of model GST law. Sachin Bansal, founder of Flipkart, Kunal Bahl, founder of Snapdeal and Amit Agarwal, CEO of Amazon India, said that if implemented, TCS will bring e-commerce industry to a standstill. The three major players, along with other players in the e-commerce space and FICCI, have requested government to reconsider their stance on implementing TCS.
TCS essentially mandates e-commerce marketplaces to deduct a portion of the amount payable to sellers and remit it to the government. The CEOs from respective e-commerce marketplaces felt that TCS will lock up working capital worth Rs 400 crore for periods between 20-50 days.
It will have a significant impact on the cash flow, thus forcing small vendors on these sites to seek additional working capital. They might even choose to ignore the e-commerce marketplace, as the clause does not apply in offline retail. Even in online world, it applies only to marketplaces.
An e-commerce company is required to report the TCS details in the monthly return form with elaborate bifurcation of TCS pertaining to IGST, CGST and SGST separately. This will make the reporting and compliance with TCS a very cumbersome process.
"We completely support GST and firmly believe that it will be a very transformative step for business. The TCS however has ability to shake things in the e-commerce space. Our ability to add sellers will go down. We are hopeful that government will be responsive to our logical concerns", said Sachin Bansal, founder of Flipkart.