Flipkart Makes First Move as Ecomm Sector Prepares for GST Rollout
The ecommerce sector is preparing to ensure compliance with the goods & services tax system before the new tax regime’s targeted rollout date of April 1 next year, even as it continues to negotiate with the government over some provisions in the law.
Providing training on the new system to making operational changes, the sector is gradually seeing a move towards the GST era, and Flipkart seems to be among the early movers. The company has listed several to-dos on its agenda over the next few months to prepare for GST.
“Our priorities over next few months are to make changes to our ERP systems, GST trainings across the seller ecosystems and internally within the organisation and to engage with the government proactively during deliberations in the law-making process,“ a Flipkart spokesperson said.“We are quite confident of being ready well in time for the April 1rollout.“
The company did not elaborate on the nature of the changes it is making or the engagements with the government. Amazon India said it was looking forward to details of the GST implementation, but didn’t comment on preparation. Snapdeal and Paytm didn’t want to comment at this stage.
ShopClues founder Sandeep Aggarwal had earlier told ET that ecommerce companies would have to set up new teams and processes and bring in technology to deduct taxes for thousands of sellers and file them with the government.
Under GST, ecommerce platforms will have to adhere to tax collection at source (TCS) and collect and pay taxes on behalf of the sellers on their platforms. Accor ding to the Internet and Mobile Association of India (IAMAI), GST will raise operational costs.
“TCS imposes a massive compliance burden on online marketplaces, with three different forms of GST filing (state, central and integrated) and three separate returns each month to be filed apart from the annual return,“ the association said in a note.
According to Dinesh Mishra, partner¬advisory services at EY India, companies should have started preparing for GST “yesterday“. “As of today , GST is expected to roll out on April 1 next year, and only those that have started their assessments are likely to be compliance-ready in time,“ Mishra said.
“Ecommerce companies need to update their process to bring sellers into a contractual format, update invoicing and payments processes and update their IT systems to comply with GST. They also need to look at which states they see a lot of operations in inorder to register there,“ he said.
According to IAMAI, ecommerce agencies will be perceived as `agents’ of sellers under the GST framework, and hence the fulfillment agencies may now be interpreted as `place of business’ and require mandatory registration in each state.
Ecommerce players can work on optimising logistics and the supply chain to take advantage of the unification of taxes once GST comes into effect.
“GST will enable us to optimise warehousing costs and also, to reach customers faster,“ Flipkart said. The company did not say if it will bring about a change in the number of its warehouses.
“Companies can focus on optimising the number of warehouses depending on their business instead of setting up a warehouse only to optimise taxes,“ Mishra said. – www.economictimes.indiatimes.com [16-09-2016]