Draft
GST Law
NDA
government has just released , DRAFT GST LAW , for consultations
among stake-holders
In
the matter of " E-Commerce transactions "
, the draft proposes :
".....
a tax collection at source for E-Commerce companies "
MINT
( 15 June 2016 ) interprets this as follows :
"
This means that any payment made to a supplier by an E-Commerce company will be
subject to tax collected at source "
In
the matter of " Intangible and Works Contract to be classified
as Services " , it says :
"
The law classifies intangibles such as software and works contract as Services
"
MY
TAKE :
A
Commerce by any other name ( including " E Commerce " ) , is still
sale of " Goods / Services " by a Seller , in exchange of "
Value " , ( usually money - when that exchange is not a Barter Deal ) ,
received from the Buyer
E - Commerce " is
nothing more than " Commerce " , where such exchange of values , take
place electronically , as opposed to physically . It still remains Commerce ,
even when perceptions differ
Hence , regulations /
controls / taxation etc that govern E-Commerce should , essentially remain the
same as in case of Commerce
Mere elimination of an
intermediary ( Distributor / Wholesaler / Dealer / Agent / Stockist etc ) ,
from the " Supply Chain " , itself cannot be the determining criteria
Take
a look at the various parameters of " Commerce " outlined in my following
blog of 15 Sept 2015 :
--------------------------------------------------------------------------------------------------------------------------------
Not an easy task to define
what is E Commerce ( and what is not ), considering all the possible
permutations / combinations ( running into LAKHS of them ! ) , of the following
elements :
# NATURE
* A physical " Product " ( Capital Goods / FMCG / Consumables /
Perishables )
* A virtual " Service " ( Medical advice / Legal
advice / Consultancy / Software etc )
#
GEOGRAPHIC SPREAD
* Across National boundaries ( International
Trade )
* Across State boundaries
( within India )
* Across Municipal boundaries (within a State )
# SUPPLY-
CHAIN / INTERMEDIARIES
* Mfr > Distributor > Dealer
> Retailer > Buyer
* Mfr > Buyer
* Any disintermediation in the above chain
#
ORDER PLACEMENT / ACCEPTANCE
*
In a physical location ( Shop / Store / Office / Factory / Home )
* In a virtual location (Web site/Mobile App/SMS/ Email
/ Phone / Video Conference )
#
DELIVERY
* Physically in a Shop / Store etc where Buyer collects / picks-up
from shelf
* Delivered to Buyer's location, thru Delivery Boy
* Delivered to Buyer's location, using a Drone
* Delivered to Buyer on his home-based 3D Printing Machine
( using internet )
# PAYMENT
* Cash against delivery
* Pre-paid / Post-paid Cheque
* Credit / Debit Cards across counter
* Credit / Debit Cards thru online Payment Gateways
* Through Mobile Wallets
* Electronic Bank Transfer
*
Using Virtual Currency like Bit-Coins
* Barter of Goods or Services
#
FOREIGN INVESTMENTS
* FDI in Manufacturing / Supply Chain / Payment Gateways -
Apps- Mobile Wallets
*
FDI in Web sites like Amazon - Flipkart - Alibaba - Snapdeal etc ( What
percentage ? )
Can you think of any other
" Elements " that I have forgotten ?
In any case , given the fact
that there can be lakhs ( if not millions ) of permutations / combinations of
the above-mentioned elements , one must not attempt to define what is E
Commerce ( and what is not ) , by inclusion or exclusion of these elements in
definition
Such a complex definition
would lead to thousands of court cases involving Governments and each court
interpreting the definition , differently !
The only definition that
would satisfy ALL of these permutations / combinations , is :
Any exchange of " Value
" between any number of parties , involving ,
> Goods or Services
, on the part of one party
with,
> Money or its
equivalent consideration , on the part of a second party
with or without using,
> Intermediary
services , on the parts of any other parties
--------------------------------------------------------------------------------------------------------------------------------
I
hope the " DRAFT GST LAW " refrains from defining " E
Commerce " separately - and as distinct from plain vanilla commerce
GST
Law must adopt a BROAD / ALL-ENCOMPASSING , definition of " Commerce
"
--------------------------------------------------------------------------------------------------------------------------------
17
June 2016
www.hemenparekh.in / blogs
--------------------------------------------------------------------------------------------------------------------------------
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hemen
parekh
Marol
, Mumbai , India
(
M ) +91 - 98,67,55,08,08
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