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GST Update 06.07.2016

ELECTRONIC COMMERCE:-

 
GST DAILY DOSE OF UPDATION:-
 
 
ELECTRONIC COMMERCE:-In the present era of e-world, where every task  is being concluded through internet, it becomes very important to make suitable provisions for taxing e-commerce transactions. A step in this direction was taken by the Government in Budget, 2015 itself wherein services provided by aggregators were being brought under service tax under reverse charge mechanism. Similar provisions have also been incorporated in the proposed GST regime also.
 
In the proposed GST Act, 2016, ‘Aggregator’ is defined as a person who owns and manages an electronic platform, and by means of the application and a communication device, enables a potential customer to connect with the persons providing service of a particular kind under the brand name or trade name of the said aggregator. The above definition is more or less similar to the present definition of aggregator under Rule 2(aa) of the Service Tax Rules, 1994 which means a person, who owns and manages a web based software application, and by means of the application and a communication device, enables a potential customer to connect with persons providing service of a particular kind under the brand name or trade name of the aggregator.
 
Hence, tax is payable by the aggregator on facilitating provision/supply of a branded service or goods to the potential customer via internet. Common examples of aggregator are Meru Cabs, Ola Cabs, Trip Advisors, Flipkart, Amazon, Snapdeal etc.  It is pertinent to mention that even in the proposed GST regime, the liability to discharge tax to the government exchequer lies on the aggregator and a mechanism of ‘Collection of tax at Source’ has been proposed.
 
As GST regime is a unified taxation reform subsuming VAT and Service Tax, the aggregators will be liable to collect and pay tax on behalf of supplier of various branded goods, i.e., aggregator model will be also leviable to VAT and that too, under reverse charge mechanism.
 

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