Modi Government plans to plug tax evasion by sellers on e-commerce portals

NEW DELHI: Faced with a saturated taxation system and rising expenses on works like drought relief which have led to a spiralling revenue deficit, the state government is looking at tapping new sources of revenue and plugging any evasion in transactions on e-commerce portals.

The 2016-17 Budget also touched on computerisation in the sales tax department, ease in registration and assessments and amendments to plug tax evasion by showing a below market sale prices. Finance minister Sudhir Mugnantiwar also announced an amnesty scheme for pending dues which, officials estimate, will unlock around Rs500 crore revenue.

Sales tax accounts for the highest chunk of the state government’s revenues (30.08%) at Rs81,437.69 in 2016-17.
“In the era of Digital India, e-commerce transactions are increasing. It is proposed to periodically obtain information from e-commerce companies regarding sales-purchase transactions made on the portal. Penalty shall be imposed upon a portal for not furnishing the information,” said Mungantiwar in his budget speech.
Officials said the measure was aimed at plugging tax evasion by sellers on these portals.
“These portals are platforms for sellers and buyers and charge commission from sellers. They will need to give us information about these transactions in a format to be notified soon. We are trying to check if suppliers from Maharashtra who have a turnover of above Rs10 lakh are registered with us and if they are registered, are they paying tax,” a senior state government official explained.
“On the backdrop of forthcoming Goods and Services Tax, some states like Bihar, Himachal Pradesh, Gujarat and Madhya Pradesh have announced amnesty schemes for pending dues. The tax liabilities on the transactions in many cases is a matter of dispute. Such matters are pending in appeal before various courts,” said Mungantiwar, adding that this would do away with trouble for both, the dealer and the government.
“To address this problem and to unlock the revenue in appeal pending before the courts, I propose an amnesty scheme for such dues under the tax laws implemented by the Sales Tax Department,” he said, adding that the amnesty will be available if the dealer withdraws the appeal.
For periods before April 1, 2005, if the dealer pays the disputed tax in full, then the corresponding interest and penalty shall be waived. For periods from April 1, 2005 to March 31, 2012, if a dealer pays the disputed tax amount and 25% of disputed interest, the corresponding balance interest and penalty shall be waived. The amnesty shall be available from April 1, 2016 to September 30, 2016. The procedural details of the scheme will be announced later.
An official said that they expected the amnesty scheme to unlock Rs 500 crore in post-April 2005 cases.