GST to take care of many of e-commerce firms’ tax issues: IT minister

Dated 21st November, 2014

Ravi Shankar Prasad who took charge as information technology (IT) and communications minister in May, has received plaudits for sustaining the momentum around Digital India, which aims to provide government services to citizens online and connect villages to high-speed Internet networks to improve governance. But many have been critical about his handling of the telecom sector over spectrum issues, taxation of the rapidly growing e-commerce sector and increasing censorship of the Internet, ostensibly over national security issues and to combat child pornography.

In an interview on Wednesday, Prasad, who is also a lawyer, was categorical that he would not comment on spectrum issues, but insisted that the government is keen to support e-commerce companies. Prasad believes the introduction of the goods and services tax (GST) will help resolve the taxation problems of e-commerce companies. He also spoke about how the new government is balancing freedom of expression and security concerns with Web filtering. Edited excerpts:

Do you see enough private participation in India ?

Cisco (chairman and chief executive officer John Chambers) came to meet me, Mark Zuckerberg (founder and CEO of Facebook Inc.) met me. Then Flipkart came… This evening (Wednesday) I had a meeting with the postal department as to how to leverage the postal department’s infinite infrastructure, nearly 1.5 lakh post offices, in the interest of e-commerce. Flipkart and Amazon are in touch with them. I have told them to modernize and to leverage their network in rural areas so that talents of the Indian artisans can be blended with the e-commerce. I see a lot of role for private players in distribution. If we are able to ensure e-commerce, e-education and e-health ride on this, it will really change the landscape of India. Today, I had a meeting on e-commerce. (I was told that) we do e-commerce worth Rs.70,000 crore in India. The biggest contribution of e-commerce in India, as Sachin Bansal (co-founder) of Flipkart told me, is cash on delivery. It is something unique. As I have always said, in India, you will have rocket science and jugaad technology going side by side. Any policymaker must create an ecosystem so these can exist side by side. We want this cash on delivery, or jugaad, to exist with smart cards.

But if the government is serious about Digital India, how do you plan to solve the discrepancies in taxation that e-commerce companies are facing ?

GST will take care of a lot of those issues. We are pushing GST in a very substantial and effective way. Secondly, a lot of these challenges will be answered by the pressure of consumers. Softbank (CEO Masayoshi Son) said there were five million drivers with Alibaba. Once we begin electronic manufacturing in India in a big way, we can give jobs to 20 million people. If e-commerce spreads in India in an effective way, we can give jobs to millions of people. Once this will become evident, then politicians will need to understand that this particular venture should not be caged by uncalled-for regulatory frameworks. GST will take care of this. There is no problem with healthy competition, but the quality of goods and services should be good.

(This interview is published in LIVE MINT on 21st Nov, 2014)