Indian government has
been streamlining e-commerce and activities related to the same for
the past one year. Initially an e-commerce friendly foreign direct
investment policy was formulated by Indian government. The same may
be accessed at Consolidated
FDI Policy Circular Of 2015 By DIPP (pdf). Then guidelines
were issued to further clarify the e-commerce related business
activities in India. The same can be accessed at Guidelines
For Foreign Direct Investment (FDI) On E-Commerce 2016 Series
(pdf).
Now Indian government
is testing a software that intends to capture crucial data related to
export of e-commerce related goods and services in India. Indian
government has already indicated that it would impose tax on online
transactions happening in India for certain cases. For instance,
according to the Budget announcement, any person or entity that makes
a payment exceeding Rs 1 lakh in a financial year to a non-resident
technology company will now need to withhold 6% tax on the gross
amount being paid as an equalisation levy.
The said rule is
applicable when the payment is made to companies that don't have a
permanent establishment in India. This tax, however, is only
applicable when the payment has been made to avail certain B2B
services from these technology companies. Specified services include
online and digital advertising or any other services for using the
digital advertising space. This list, however, may be expanded soon.
Indian government now
plans to tap data on overseas online sales as part of efforts to
boost outbound shipments through e-commerce platforms and channel
benefits to these dedicated exporters. Indian government has made a
software for e-commerce exports that would capture data for further
action and policy decisions. This would benefit small exporters as
customised solutions can be then provided to them by Indian
government. Presently the value of items shipped through couriers is
often not captured in export data because they are categorised as
samples or gifts. These are labeleled as samples because under the
normal export channel exporters have to file shipping bills and are
subject to checks by custom officials, which is cumbersome,
especially for small exporters with low-value shipments. The software
intends to mitigate these rigours and further help in claiming duty
drawbacks for e-commerce exports. To give benefits to small
exporters, the director general of Foreign Trade has defined
"e-commerce" as the buying and selling of goods and
services, including digital products, conducted over digital and
electronic networks.
These steps are being
introduced a year after the government provided export incentives to
the shipment of goods through couriers or foreign post offices using
e-commerce in the Foreign Trade Policy of 2015-2020. At present,
exports that can avail of these sops are capped at Rs 25,000 per
consignment, a value considered small for such purchases. Moreover,
only six product categories i.e. handicrafts, handlooms, toys,
customised fashion garments, books and leather footwear are entitled
to these incentives under the Merchandise Exports from India Scheme
(MEIS).
