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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