Do you remember the last time you went to shop at some store for a well thought and expensive purchase without checking it out on the internet first? Probably you won’t. This is how much E-commerce has altered our consumer behavior.
Even medium sized showroom owners today selling something like a mobile phone do not need to explain too much about product features since checking out a product online and buying it is way more convenient and common.
With the E-commerce revolution, the footfall at shops and stores has reduced. E-commerce provides you the convenience of ordering and buying things from your comfort zone. There are also various e-commerce platforms which are providing the facility of shipping and delivery throughout the world irrespective of national borders.
There is some amount of custom duties which are enforced by the government on such deals which is usually borne by the customer.
What has changed for these cross-border e-tailers?
For some time now, the Indian government was keeping a close eye on the imports of products from Chinese platforms. This was usually done in the form of gifts. The Chinese e-commerce platforms like AliExpress, ClubFactory etc. have been declaring all their shipments which were valued below 5000 INR as gifts and evading paying custom duties on them.
The government has planned to introduce a prepaid tax and custom duties on cross border deals which are supposed to be implemented very soon. The motive behind prepaid taxes is to overcome the illicit imports of products and tax evasion.
Also, the customs duty on some household items such as electronic appliances etc. have also been proposed to be increased in the Union Budget 2020. These two measures seen together are likely to escalate the cost of e-commerce deals. The products on all the foreign websites are expected to become 50 percent costlier after these measures are implemented.
The New Payment Interface
The center is also working on developing its own payment systems. All the cross-border e-commerce platforms will need to fill in all the details, including the shipment type, price and the applied custom duties. They will need to make the payment of all taxes and duties in advance too and receive appropriate receipts for the same.
The cross-border platforms are misusing the gift channel for imports of commercial goods and products. It is planned that apart from medicinal drugs and rakhis, all other packages which enter India through the gift route will be banned.
The Prepaid Collection of Customs
All the e-commerce platforms will now need to collect the appropriate customs from the customer in advance and pay online to the government through the new interface.
The big giants like Amazon and Walmart-owned Flipkart have been paying taxes on a regular basis while the platforms which are based in foreign locations usually escape from all the duties and taxes. This makes the goods and products cheaper by almost 40-50 percent.
It is expected that the prepaid platform will make the custom clearance seamless and the updated Foreign Trade Policy which will ban all products except very few to be imported via the Gift route, will also help in a fair payment of appropriate taxes and customs to the government.
Custom duties are amongst the major source of revenue for the government. The economy is already in doldrums. There is a huge financial crisis waiting if the government doesn’t opt for any preventive measures to stop all leakage of taxes.
It will be worth the wait to watch how the e-commerce platforms tackle the stricter norms for import by the Indian authorities. This will lead to a drop in the cross-border sale through foreign platforms because the prices of the products will rise considering the fair payment of all applicable taxes and customs.
Data is updated on 7th per month. It gets verified every quarter by independent auditor.
Data presented here is taken from company's inception
Importance given to satisfactory resolution as per prescribed TAT