Flipkart, Snapdeal and Amazon have reportedly stopped delivering products exceeding Rs 5,000 in value to customers in UP and Uttarkhand.
Independent sources from the three companies told ET Tech that they faced harassment by tax authorities over a form that buyers are required to furnish when buying goods from other states.
Buyers are required to file a VAT declaration along with the registration number of the vehicle bringing the products, which has to be furnished by the deliverer.
Tax authorities are strictly following the state directions and have even seized goods exceeding the limit.
“Owing to these statutory restrictions imposed by the UP government, we do customer deliveries for shipments only up to Rs 5,000, which is for interstate shipments,” said a Flipkart spokesperson. [Source]
Previously, Karnataka proposed to impose a 1% VAT, deducted at source on all payments to dealers in the state by ecommerce firms; the move was unwelcomed in the industry.
Online marketplaces provides a technological platform to connect independent vendors to consumers and should be treated as facilitators— as done by Kerala, Delhi, Rajasthan, West Bengal and Tamil Nadu, says another spokesperson from Snapdeal.
“The tax-related obligations of marketplaces are assessed as services. As facilitators, such marketplaces are tasked with providing information returns to tax authorities to augment enforcement and compliance,” added Snapdeal [Source]
Last year, ecommerce companies stopped shipping high-priced products in Noida and Ghaziabad after delivery the personnel were reportedly mugged, while consumers refused to pay for products ordered through cash on delivery. After the issues were resolved, companies resumed deliveries earlier this year.