As the date for the unveiling of the union budget 2016 approaches closer, industrialists across the spectrum are looking forth to some key announcements, especially about the rollout of GST as part of the tax reforms undertaken by the Modi government. According to experts, one of the biggest beneficiaries of this can be the booming e-commerce sector in the country.
Currently, there are no tax laws in place to regulate the e-commerce industry in India. Hence, tax is imposed based on the understanding of the local taxation authorities and the lack of a structured tax policy in this sector is detrimental to the interests of the e-commerce players including its key stakeholders.
We spoke to some e-commerce players about their expectations from the upcoming union budget, especially related to the tax reforms, and here is what they had to say:
Kunal Bahl, Co-founder and CEO of Snapdeal:
“India presents a huge opportunity as it continues to build physical and digital infrastructure for its large population, which in turn will boost economic activity and create massive employment. Given the quantum of the task, large capital inflows and suitable tax breaks can help accelerate the process. We hope that Budget 2016 will continue the task of creating a favourable, predictable and investment friendly climate for global funds seeking to participate in India’s growth story. We also look forward to announcement of policies geared towards achieving a "less cash" economy, making the economy more efficient and transparent.
During this Budget session hopefully, political consensus will also be reached on the GST Bill and it will get passed. The movement forward in indirect taxes will help align taxation with contemporary business models and will resolve varying interpretations of VAT / CST and service tax, which complicate the operating environment for e-commerce companies, including for inter-state movement of goods. On a broader note, uniformity in taxation laws across the country will significantly ease tax compliance for businesses and benefit government by bringing in easy tax administration and greater transparency.
Raghav Bahl, Founder, The Quint:
“We need only two things: one, more bandwidth/spectrum; and two, a level playing field on taxes. Why should a rich, old, viable, lucrative medium like print advertising be exempt from service tax, while the fledgling, entrepreneurial, technology driven Internet advertising is skimmed?”
Rohan Bhargava, Co-founder, CashKaro.com:
“India action plan laid by the government has pinned a lot of expectations on what should be done and should not, but now it is time to ensure it walks the talk this budget. Aspects like the fund-of-funds, tax benefits, which are great on paper, needs to get implemented. I would like the budget to set out clear and measurable timelines with minimal bureaucratic intervention and not keep it as vague as it is now. Being an affiliate site we hope the government will present a tax policy that will address the complications of the current tax structure faced by e-commerce sites. We also hope that the GST roadmap will be shared in the budget for FY 2016-17.
Finally, we look forward to building an ecosystem which paves the ground for Innovation & Entrepreneurship in India.”
Jason Kothari, Chief Executive Officer, Housing.com
“As we stand on the cusp of fiscal 2016-17, there are a lot of expectations from the upcoming budget. The real estate industry is looking forward to GST becoming a reality, which will greatly benefit the ecosystem, and drive much needed transparency in the real estate transactions. We are hopeful that the regulatory bill will bring value to the homebuyers and the government will continue to provide incentives to sectors such as construction materials, while aggressively driving urban infrastructure projects. Implementation of these initiatives will create a positive sentiment in the market and have a direct impact on the future of players in the online real estate segment. Additionally, we are excited about the initiatives announced recently under the ‘Startup India, Standup India’ program, that will create a conducive business environment and strengthen the entire ecosystem.”
Mehul Jobanputra, Co-founder, DesiDime.com & Zingoy.com:
“The government is being considerate of the start-up culture in the country. We got positive vibes from the PM & the insights at the start-up India event were truly great. We are hopeful that this budget will be pro-start-ups on mainly three points:
1) Ease of doing business.
2) As an entrepreneur all we want to do is to focus on growth and not worry about generalist complicated tax structure, typically meant for established companies. Creation of Special Economic Zones can achieve this or Innovation Centers meant only for start-ups, however we are unsure of the government’s take on this.
3) Capital or direct investments by the Indian government by means of bonds, equity etc., in promising start-ups.”
Saahil Goel, Co-Founder & CEO, Kraftly:
“GST is yet to be passed, we hope that this tax system will be introduced at the earliest as this would reduce the cost of inter-state movement of goods, and ease the documentation requirement for small merchants. As an e-commerce company we are expecting easy taxation across states. For example Delhi has introduced DVAT for e-commerce companies as a compulsion. This creates a lot of problems, especially for start-ups. We are looking forward to a positive response from this union budget for start-ups and emerging entrepreneurs.”
Manoj Gupta, Founder Craftsvilla.com:
“The e-commerce segment is looking for a major boost from Budget 2016. We represent a $7 billion industry, growing at more than 40% every year. Definitely, we are looking at driving home the advantage in the future after logging some deep-rooted impact in the last fiscal. The Government of India should allow 100% FDI for e-commerce to move ahead of competition. Foreign investors can make strategic investments in smaller online retailers. This will also help the investor ecosystem in India to mature faster. Also, GST would be a game changing reform, it will enable a country wide, single market with reduced transaction costs for businesses and controlled economic volatility.”
Easing regulatory norms that will not just benefit the e-commerce companies by further accelerating their growth, but will also position India as industry friendly and attract more investments from foreign investors, in turn creating a ripple effect by generating infinite employment opportunities.