SUMMARY
Reports suggest that foreign etailers have been evading tax laws
Step to limit the reach of the China-based ecommerce companies
The INR 5,000 ($71.5) limit can be used via any KYC route
The government is reportedly 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, especially those from China.
According to reports, a complete ban on such imports was also considered but the Department Of Industrial Policy & Promotion (DIPP) has suggested limiting such imports to four per person in a year. Also, the INR 5,000 ($71.5) limit can be used via any know-your-customer (KYC) route and not only by the Aadhaar number.
Further, the government may also introduce sample checking of the consignments. The measures are aimed at limiting the growing popularity of Chinese ecommerce websites which ship items directly into the country as gifts. Currently, India’s import rules exempt gifts worth INR 5,000 and less from custom duties.
In a meeting held in September 2018, a standing group of secretaries led by DIPP Secretary Ramesh Abhishekh had directed the department of revenue to explore ways to prevent violation of customs laws, especially the gifting route.
The department has been directed to track the source country, keep a tab on the consignors/consignees to identify suspicious activities, strike down the exemption for gifts, and limiting the number of such consignments. Officials have said that Chinese etailers do not ask customers for any government-issued identity proofs to complete transactions, which is a violation of domestic laws.
Recently, Rashtriya Swayamsevak Sangh’s (RSS), economic wing Swadeshi Jagran Manch (SJM) had voiced their concern that Chinese ecommerce companies such as AliExpress, Club Factory and Shein deliver their goods via courier and postal gift shipments which helps them to evade taxes like customs and GST.
According to them, the Chinese etailers have been taking advantage of the clause in India’s Foreign Trade (Development and Regulation) Act. Gifts from foreign etailers have also been a part of the discussion by DIPP regarding the ecommerce policy draft.
Even though these websites take significantly longer than their Indian counterparts, the companies have gained an increasing market in recent times because of their wide-ranging products, affordability, and style quotient.
The government is now taking a serious interest in all aspects of India’s ecommerce market. The move to reign in Chinese ecommerce companies is part of its efforts to build a regulatory framework around the sector.
Policy makers are also currently discussing an ecommerce policy to ensure a level playing field for both the domestic and international ecommerce players, the ecommerce policy draft has suggested that about 49% of foreign direct investment (FDI) may be allowed in inventory based ecommerce companies, allowing them to offer their own brands as long as they are made in India.
Further, the policy draft, which is expected to come into effect from February 1, also states that ecommerce players will not be allowed to sell products of companies in which they own a stake.
[The development was reported by ET]
