In a fresh accusation against e-commerce companies including Amazon and Flipkart, traders body Confederation of All India Traders (CAIT) has levelled charges of causing GST revenue loss to both Central and State Governments by their predatory pricing practices.
CAIT in a letter written to Finance Minister Nirmala Sitharaman has alleged Amazon and Flipkart of selling goods at much below the market value and denying the Government its due legitimate GST revenue.
“E-commerce portals particularly on Amazon & Flipkart offering deep discounts ranging from 10% to 80% is being given by them on different products, which is quite abnormal and generally not available in offline market and thereby the sales are made on a much lower price than the market value of the product and as such the GST is charged by them on the sale price,” the traders body said in a letter.
CAIT also elaborated it through an example, which showed ecommerce firms liable only to one-fourth of GST after selling goods at a 70% discount rate.
“By lowering the price artificially to capture the market, these e-commerce companies are causing huge loss of GST revenue to the Government and violating the FDI policy of the Government,” it added. Though, it did not share any details on estimated GST loss. CAIT has further urged the Finance Minister to institute a probe into this business model, which is causing huge GST revenue losses to the Government and recover the difference of GST between billed price and market value from the period of implementation of GST.
As per the GST Act, the Govt is allowed to determine the actual market value of the products if it appears that it is under billed.
Traders body has also written to Union Commerce Minister Piyush Goyal and Finance Ministers of all States.
In the last few months, CAIT, along with similar representative bodies AOIVA, AIMRA, has been continuously raising the issue of deep discounting, predatory pricing and exclusive deals.
In case of flouting of FDI rules, CAIT had also got an assurance of action against e-comm firms from the Commerce Minister and CCI chairman.
Two weeks ago, CAIT had raised questions on the business model of e-comm firms and requested an independent audit by the govt. The govt is yet to take action in this regard.
However, early this month, both Amazon and Flipkart had refuted charges of flouting FDI norms and predatory pricing. They attributed discounts offered on their platforms to brands.