Karnataka may soon raise tax burden on e-commerce companies, other states may follow

Karnataka government may ask e-commerce companies to pay a one percent levy on the payments made by buyers to sellers. The step not only will make online shopping costlier, other states may follow suit.

Zee Media Bureau

New Delhi: Indian e-commerce companies like Flipkart, Amazon India and others may soon fall under the extra burden of tax, as Karnataka government plans to propose a 1 percent levy on the transactions between buyers and sellers. If the state government goes ahead with the levy on the payments made by the buyers to sellers, it is very likely that other states may follow suit.

According to The Economic Times report, the planned levy, in the form of value-added tax deducted at source, was discussed at a closed-door meeting called by Karnataka's principal secretary, finance department, on Monday. The IT & ITes lobby group National Association of Software and Services Companies ( Nasscom) would also be responding to the government's plan.

The ecommerce companies have voiced their opposition. It is only natural that these companies would be passing on the tax burden to buyers, making online shopping costlier. According to state government officials, the levy on transactions will help in keeping  tab on the revenues of online companies.

With the rising online transaction on ecommerce, state governments do not want to lose out on revenue. In most cases, invoices issued for online purchases show taxes levied, but states are not willing to take any chances as these companies have complex delivery structures.