With the Finance Bill proposing to place online marketplaces (OM) under the definition of ‘Tier 1 Retailers’ which primarily means that transactions would face 17 percent tax, the respective marketplaces strongly opposed the change as this would simply give unauthorized sellers to expand themselves hence making the OMs lose their customers.
As of this moment, there are more than 17 platforms that operate as online marketplaces in the country offering numerous products from second-hand to groceries and other goods.
Under this OM model, the title of the goods remains with the seller but not with the OM itself. Moreover, with the new tax, the burden of collecting and depositing sales tax has been placed on the OM industry.
In a nutshell, the OMs will need to start issuing sales tax invoices for all taxable goods processed through their respective platforms. In addition to this, the platforms will receive sales tax invoices from the registered sellers and will have to claim these as input tax in their tax submission. However, the same does not qualify for unregistered suppliers.
Eventually, this would make the consumers lose convenient access to a large number of goods that are readily available at such OMs.