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How can e-commerce sites be retailers for tax purposes and not for FDI asks Delhi HC

Amid lack of clarity on foreign direct investment (FDI) policy for ecommerce websites and marketplaces, the Delhi High Court pulled up state and central government agencies and asked them how sites such as Flipkart, Amazon and Snapdeal can be treated as retailers for taxation purposes and not the same when it came to FDI, as indicated by Press Trust of India. “Prima facie, the Union of India/State Governments cannot, on the one hand, for the purpose of tax, treat such sales as retail and on the other hand, for the purposes of investment, not treat the same as retail sale,” said Justice Rajiv Sahai Endlaw while listening to a petition alleging that e-commerce sites are violating FDI policy by retailing goods through Internet. The case was registered by an association of footwear makers and retailers which contended that though FDI is prohibited in retail that there are entities retailing goods through the Internet are not being restrained from accepting foreign investment. It added that Internet-based entities are in this way violating the FDI policy and thus, prejudice was being caused to them. Accordingly, the court sought replies from the Centre, Delhi Government, Reserve Bank of India and the Enforcement Directorate. The next date of the hearing is on October 14. Taxation and FDI situation currently In India, 100% FDI is allowed in business-to-business (B2B) ecommerce, while it is banned in the business-to-consumer (B2C) segment. Besides, there is a 30% local sourcing rule for foreign players. It's worth noting that there are currently three states in India -…

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