Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do.

There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

Thursday, 16 June 2016

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 :

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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


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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 "

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17   June   2016

www.hemenparekh.in / blogs

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