The Income Tax Department is intending to scrutinize the business of Flipkart and Amazon starting with the details of their top five sellers in India. The motive behind the scrutiny is to check whether these top and most competent online e-commerce portals are obedient to the Goods and Service Tax regime.
Alternatively, it appears to be that the scrutiny is also to satisfy the claim of the offline traders who have labelled these online e-commerce portals accused of granting illegal discounts. Well, the first aid to the situation is to shoot a compliant to the Competition Commission of India (CCI) concerned with similar issues.
Regarding the issue, the government is now seeking proper compliance documents from leading e-commerce businesses and a taxman is assigned for investigation of these online businesses. With this, the government is setting an example of its unflattering surveillance along with keeping its commitment to how it would deal with matters of foreign companies operating in India.
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The tax department has already framed its compliance requirements in front of these online e-commerce portals operating under the GST regime. On the other hand, the government already has more than enough data as these businesses are obliged to collect tax at source on their sales, so the govt can pursue the audit of these online businesses. As per the law, vendors are obliged to register themselves under GST irrespective of their turnover this law is yet another impactful technique in taking out vendor-wise information like tax paid or input tax credit availed by them. The tax department has access to data of taxpayers accumulated by GST Network.
Amazon and Flipkart is a medium for small or medium vendors through which they can reach out to a large public with their products and services without spending huge money on the distribution frames of their own.
For now, Amazon and Flipkart are filing an audit report complying with their FDI guidelines as a means of voluntary good practice. There are chances of government amending its Foreign Exchange Policies to make such filing mandatory.
