As the central government cracks down on Chinese etailers delivering products to India as gifts, the ecommerce companies are now undervaluing the products being sold to Indian consumers in their invoices to circumvent current regulations.
Citing sources, a report by ET said that companies are reducing the price of products by about 50% in its final invoice as compared to the listing on the online platforms.
The Courier Bill of Entry also known as CBE-13 allows import of goods which are valued up to INR 1 Lakh. The etailers are misusing these rules and are allegedly evading taxes by reducing the price in the final invoice. By reducing the prices of the products, the companies will have to pay lowers customs while delivering the shipments in India.
Currently, India’s import rules exempt gifts worth INR 5,000 and less from custom duties. This rule is allegedly being misused by the Chinese etailers who are delivering commercial shipments in disguise of a gift to avoid taxes.
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In December 2018, Swadeshi Jagran Manch (SJM),the economic wing of Rashtriya Swayamsevak Sangh (RSS), had said that the Chinese ecommerce companies such as Club Factory and Shein receive more than 200K orders per day in India and also alleged that these companies are delivering goods via couriers and postal gift shipments in order to bypass and evade a range of Indian laws on payment gateways, custom duties and GST.
In September 2018, citizen engagement platform LocalCircles had written to Anup Wadhawan, secretary, Ministry of Commerce and Industry highlighting the issues.
In its second letter to DPIIT on April 3, the organisation has revealed that the initiatives have led to 60% of the reduction in incidences of the commercial shipment being delivered as a gift at the Mumbai customs port, however, it is still happening from other ports in Delhi, Bengaluru, Kochi, and Chennai.
In order to keep a check on this, the government has been considering limiting the value of imported gifts to INR 5,000 ($71.5) per Aadhaar number to keep a tab on the purchase of goods from foreign ecommerce companies.
China-based social media applications are also under strict scrutiny, especially at a time when the country is looking to begin its Lok Sabha elections. Post Pulwama terror attack, SJM had written to Prime Minister Narendra Modi, requesting a ban on Chinese social media apps, ecommerce platforms and telecom equipment.
Recently the Madras High Court passed an order to ban TikTok saying that it exposes children to pornography, and makes them vulnerable to sexual predators online. Currently, the Bharatiya Janata Party (BJP) is looking to ban social networking platform Helo alleging China’s interference in Indian elections.