IAMAI: GST to shed light on ecommerce in India

According to the industry body, the smooth passage of GST bill is crucial for the success of mega economic and social projects, especially Digital India and Start-up India. The GST bill, which subsumes all indirect taxes to create one rate and integrate the country into a single market, is the biggest tax reform that is being undertaken since Independence, but is pending approval of the Rajya Sabha.

The Digital India plan is about connecting, empowering and enabling citizens and encouraging local electronic manufacturing. Local manufacturing, NoFN, e-Gov, as a part of Digital India, where the private sector is involved, crucially rests on the successful passage of GST bill in Parliament, which seeks to create one market through one tax system. Similarly, start-ups, online marketplaces, and other online service providers, all require a single market plan.

In IAMAI`s view, the extant tax structure of India is heavily fragmented, with multiple indirect taxes levied by different authorities at different stages of a transaction. Fiscal federalism has led to different procedures and rates of VAT and other forms of LBTs across the states. This creates logistical challenges for the industry, besides giving rise to compliance related complications. Conflict of interests between tax authorities in case of inter-state transaction is a major pain point for the industry today. In this context, GST will help the digital industry business model develop by providing uniformity in tax rates and regulations across the country.

Also, much of the developments in the digital industry are disruptive innovations, IAMAI adds. Business models including online platforms and aggregators are essentially services provided by intermediaries. Such services are revolutionising the existing markets of both goods and services. According to IAMAI, the digital industry unequivocally stands for the smooth passage of GST and hopes that the bill will be passed in the upcoming budget session, as any further delay will push back the transformative projects of the government.

IAMAI is a professional industry body that was established in 2004 by the leading online publishers, and in the last 11 years has come to effectively address the challenges facing the digital and online industry including mobile content and services, online publishing, mobile advertising, online advertising, ecommerce and mobile & digital payments among others. The association is the only industry body representing the online and mobile VAS industry in India.