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@FinMinIndia @PiyushGoyal
Defer/withdraw sec #194O & #206C(1G)(b)
#194O is not only #regulatory conflict in certain sectors not allowed to deduct but will push business overseas. Will severely hurt #livelihoods #MSMEs #Traders https://economictimes.indiatimes.com/blogs/et-commentary/travel-industrys-regulatory-virus/?s=09
@FinMinIndia @PiyushGoyal
Defer/withdraw sec #194O & #206C(1G)(b)
#194O is not only #regulatory conflict in certain sectors not allowed to deduct but will push business overseas. Will severely hurt #livelihoods #MSMEs #Traders https://economictimes.indiatimes.com/blogs/et-commentary/travel-industrys-regulatory-virus/?s=09
This provision while intending to widen the tax base can become a huge negative step in India's push for digital economy as #COVID had pushed many #MSMEs #Traders #Plumbers #Electricians #Salons to go online. The 5Lac limit is also on total and not on services so includes spares
Sec #194O states "where sale of goods or services of an e-commerce participant is facilitated by an e-commerce operator through its digital or electronic facility or platform such e-commerce operator shall deduct #incomeTax at 1% of the gross amount of sales or services or both"
“e-commerce operator” is defined to mean any person who owns, operates or manages digital or electronic facility or platform for electronic commerce and is a person responsible for paying to e-commerce participant.
“e-commerce participant” is defined to mean a person resident in India selling goods or providing services or both, including digital products, through digital or electronic facility or platform for electronic commerce.
“electronic commerce” is defined to mean the supply of goods or services or both, including digital products, over digital or electronic network.
In #Travel sector, #194O would negatively impact working capital for online #Travel agents as in air ticketing business no TDS deduction is allowed upfront, all are bound by payment settlement procedure by #IATA and settlements through the BSP, GDS,CRS https://economictimes.indiatimes.com/blogs/et-commentary/travel-industrys-regulatory-virus/
#194O hurts and conflicts online #Insurance industry. Sec #64VB of the #InsuranceAct1938 does not allow #Insurance #intermediary to deduct any amount from #premium from the customers. #IRDAI and #RBI regulations also do not permit deductions. This will hurt insurance penetration
#194O will also have its impact on #B2B ecommerce transactions in terms if working capital and encouragement to go digital.
#194O will hamper the growth of #MSMEs and will discourage such #smallbusinesses from selling online. Additionally, the proposed #194O is targeting the same transactions which have already been covered by #GST #TCS for online participants selling goods.
Once the #ecommerce participant exceeds the threshold limit, #TDS needs to be deposited even on the amounts paid to the e commerce participant before the threshold is breached – deducting and depositing TDS on past transactions is #impractical to enforce and implement #194O
Another section #206C requires every seller who receives sale consideration for goods exceeding Rs. 50 lakh to collect from the buyer a #TCS of 0.1% of the sale consideration exceeding Rs 50 lakh.
In a regular #supplychain a #wholesaler, #distributor #retailer #ecommerce a product travels thro 3 to4 instances of TCS under and another instance of TDS under Section #194O
Multiple layers of #taxation will lead to increased #compliance #burden and blocking of #workingcapital hurting entire #supplychain which is already blocked in multiple sectors thanks to an #inverted #gst structure of sorts that has already blocked #workingcapital in #startups
While #GST at least recognizes the concept of #ecommerce operators acting as a collection agent for suppliers #194O refuses to recognize this and states that any #ecommerce operator has to deduct TDS on all transactions, irrespective of whether amount is being collected by them
All of the above will neither contribute to #EaseofTaxCollection nor #easeofdoingbusiness as this will bring small amounts but will require a huge #administrative machinery as tax refund demands will increase when crores of #msme #traders #dailyworkers #agents will file refunds
Hence a sincere request is to withdraw section #194O and #206C as both can have a damaging effect, hurt sectors, livelihoods, push biz out of india and relook sector wise later. @PMOIndia @FinMinIndia @DIPPGOI @PiyushGoyal @nsitharaman @praveendel
