Amit Agarwal, country manager at Amazon India said on Wednesday that while the proposal to levy a TDS on all e-commerce transactions seemed harmless paper-cuts, they impact the working capital of small businesses. “A lot of work can be done if we focus on removing friction,” Agarwal said.
Last week, the budget proposed a levy of TDS on all e-commerce transactions. “It is proposed to provide that e-commerce operator shall deduct TDS on all payments or credits to e-commerce participants at the rate of 1% in PAN/Aadhar cases and 5% in non-PAN/Aadhar cases,” the government said. The move to levy TDS may necessitate e-commerce operators to re-visit their model, contracts and systems to ensure compliance, given the enormous volumes transacted by way of e-commerce, Anil Talreja, partner at Deloitte said.
India needs an “enabling, stable and predictable” policy framework to support the growth of the country’s digital economy that has advanced at a fast pace over the past five years, Agarwal said. Speaking at the India Digital Summit hosted by IAMAI in New Delhi, Agarwal said penetration of mobile phones has boomed, digital payments has grown ten times in India, the country’s data consumption is probably the highest than anywhere else in the world, number of start-ups are rising, e-commerce has empowered small businesses and India’s digital base is the second-largest.
“These kind of large-scale transformations require capital and you need to have that predictability and stability to attract long-range investments, long-range bets,” said Agarwal who is also the chairman of IAMAI. Agarwal called for the need to forge a partnership between industry and policy-makers that is based on trust. ..(partnership) “that does worry about citizen rights, privacy and all the other issues that we should worry about but not at the expense of innovation.”
His comments come against the backdrop of the government tightening regulations for e-commerce companies. A year ago, the government’s revised FDI norms in e-commerce came into effect that barred online firms having foreign investment like Flipkart and Amazon from selling products of the entities in which they hold stake or whose inventory they control. It disallowed them from asking a seller to sell any product exclusively on their platforms. Separately, the government is also in the process of devising an e-commerce policy to create a level-playing field between online and offline players.
Amazon founder and CEO Jeff Bezos who was on a visit to India last month was denied a hearing by the Prime Minister’s Office (PMO). Bezos’ visit was marked by trader protests across 300 cities. Traders claim that deep discounting by e-commerce firms have hurt their businesses. Amazon and Flipkart together command close to 80% market share in the country’s e-commerce sector, according to analysts.