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Amazon may shut Bangalore fulfillment centre; Karnataka attempts troubleshooting

Amazon India can breathe
a sigh of relief as Karnataka government has asked its tax authorities to ease
off the e-commerce giant till an amicable solution can be reached, regarding the
cancelled licenses of Amazon’s third-party merchants, reports the Economic
Times.

Amazon India can breathe
a sigh of relief as Karnataka government has asked its tax authorities to ease
off the e-commerce giant till an amicable solution can be reached, regarding the
cancelled licenses of Amazon’s third-party merchants, reports the Economic
Times.

ISN
Prasad, principal secretary of the finance department, told the Economic Times,
“There have been certain issues flagged to us, and we are trying to sort them
out. Until then, we have asked the Commercial Taxes department to review the
matter on cancelling the ‘branch certificates’ issued to dealers.”

Recently the tax
authorities of Karnataka had stopped Amazon India from selling its products
from its warehouse near Bangalore, by cancelling the licenses of around 50 third-party
merchants that work with the local unit of the online marketplace.

Amazon India
follows the online marketplace model, where the company acts only as a service
provider, acting as a facilitator between the buyers and the sellers. The
e-commerce giant claims that since they don’t own the products at any point of
time, they are not liable to pay VAT on the goods. This issue had prompted the
tax department to issue notices to the third party merchants, ordering them to
stop proving goods in the state.

Undisclosed sources have been quoted in the Economic
Times as saying that Amazon will move its warehouse out of Karnataka if the confusion persists.

According to the
Economic Times report, the company suggested the
government to introduce a rule making it mandatory for online firms to furnish
details of transactions, seller’s identity and VAT collected, to tax
authorities from time to time to help them cross-check tax compliance. There is
a similar rule (1099-K) in the US, wherein US based online platforms are required
to report to the Internal Revenue Service (IRS) on the sales activity of domestic
users who had processed more than $20,000 and had more than 200 transactions. 

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