VAT? Telangana State asks online stores

The government has decided to issue notices to these firms to pay sales tax/VAT for the products sold in TS and also threatened to cancel licences of their dealers in TS if they fail to do so.

The TS government has been losing crores of sales tax in two ways on account of the online retail business. On one hand, sales in shops and shopping malls have come down resulting in lower taxes. On the other hand, it is losing complete sales tax on online sales by these firms.

The government is also planning to amend laws to bring online trading firms under the ambit of sales tax norms.

Out of Telangana’s total tax receipts of '35,378 crore, the sales tax alone contributes Rs 26,963 crore.

Finance minister Etela Rajender held a high-level meeting with the officials of commercial taxes department on Thursday to discuss on the issue. A senior official said, “The meeting discussed about the recent decision of the Karnataka government issuing tax notices to online retailing firms. It was decided to follow a similar policy in Telangana to prevent tax evasion by these firms.”

However, the minister said, “It is too early to comment on this issue. Several proposals have come up for discussion over how to check tax evasion by online retailers. But yes, the online retailing business is certainly affecting the tax revenues of the government.”

Officials brought to the notice of the government that these online retailing firms were selling products to customers in TS from the godowns located in metro cities like Bengaluru, Mumbai, Delhi through courier service and third-party network without paying taxes to TS. “We will issue tax notices first to these firms. If they fail to respond, we will conduct raids,” said the official.