NEW DELHI: The proposed levy of one per cent TDS (tax deducted at source) on e-commerce transactions announced in the Union Budget 2020 could impact working capital of small businesses, said Amit Agarwal, country head of Amazon India on Wednesday.
Addressing the 14th India Digital Summit organised by Internet & Mobile Association of India (IAMAI), Agarwal said: “The introduction of TDS seem like harmless paper cuts but really impact the working capital of small businesses.”
Last week, the budget proposed a levy of TDS on all e-commerce transactions.
“It is proposed to provide that e-commerce operators shall deduct TDS on all payments or credits to e-commerce participants at the rate of one per cent in PAN/Aadhar cases and five per cent in non-PAN/Aadhar cases,” Finance Minister Nirmala Sitharaman had said.
The move, experts say, may necessitate e-commerce operators to re-visit their model, contracts and systems to ensure compliance, given the huge volumes transacted by way of e-commerce. Officials of Amazon and Flipkart are also likely to reach out to the government later this week to seek clarity on the proposed TDS on e-commerce transactions.
According to the Amazon India head, the focus for India should be on “removing friction and bottlenecks” and added that the target of $1 trillion digital economies is not far fetched for a country that is seen as a digital powerhouse.
While India has the highest number of employable individuals, the country is still undergoing an employment crisis. Agarwal, however, believes that digital literacy can help the situation to get better.
“We also need to focus more on science, especially on artificial intelligence,” he said, advocating a razor-sharp focus on skilling, grass-root entrepreneurship and driving equal opportunity through greater women’s participation will help India scale in future.
Agarwal called for the need to forge a partnership between industry and policy-makers that is based on trust...(partnership) “that does worry about citizen rights, privacy and all the other issues that we should worry about but not at the expense of innovation.”
Amazon, Flipkart are likely to meet govt officials
Officials of Amazon and Flipkart are also likely to reach out to the government later this week to seek clarity on the proposed TDS on e-commerce transactions.
The move may necessitate e-commerce operators to re-visit their model, contracts and systems