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CBIC is seeking public feedback on curbing of GST, duty on overseas e-commerce companies: report

The Central Board of Indirect Taxes and Customs (CBIC) is seeking public feedback on curbing of duty and GST evasion allegedly by the e-commerce companies located outside India before amending the customs laws, reported Economic Times. CBIC is reportedly looking for a tech-enabled solution to ensure that the duties are paid correctly and make imports easier via express courier, customs officials told ET.

Nikhil adds: we checked and there is no public consultation listed on the CBIC’s website, nor is any such consultation mentioned on the CBIC’s twitter handle. However, as the ET story mentions, LocalCircles, a private citizen engagement platform, is working with CBIC to collect citizen feedback. Isn’t this what Mygov.in was supposed to do?

Suggestions on LocalCircles

In a blog, LocalCircles says that it is working with CBIC “to identify a solution where customs duty and IGST is charged to the consumer on a prepaid basis at the order placement junction and the shipments can flow seamlessly at the customs port”, and seeks inputs on “how such a solution can be implemented between ecommerce portals/apps, payment gateways and customs”.

Some of the suggestions included mandatory registration of all overseas e-commerce entities in India and data capture at single source inside the CBIC. Some other suggestions according to citizens are:

  • Flat rate on imports through express courier
  • Disallowing overseas e-commerce transactions from being classified as B2B transactions through local partners.
  • Another user suggested disclosure of details about the sourcing company, forwarding and logistic agencies, and the courier employed for transparency and accountability.
  • Users also suggested that all apps for purchasing goods from overseas companies should be linked with the customs department so that the department can see the details of the order and levy applicable duty to the final price to be paid. Only then can the customer be able to place their order. Once the payment is made, the customs duty part should be credited to the customs department.
  • Some users were also inclined towards the idea of banning goods from China
  • The government should make it compulsory for all e-commerce entities to obtain KYC for all suppliers and register with GST.

Problem of customs and duties evasion

In July, in order to stop e-commerce shipments from Southeast Asia and China which were wrongly declared as ‘gifts’ to evade duties, the courier terminals at Bengaluru and Delhi stopped clearing parcels under the CB-12 (gifts and samples) route. Mumbai Customs took similar action in January 2019.

According to the CB-12 rule, individuals can receive free samples and gifts up to Rs 5,000 in value without paying any duties. There is also no cap on the number of gifts that an individual can receive. It was alleged that the e-commerce companies based in China, such as Club Factory, Shein and AliExpress, misuse this rule to ship cheaper products to Indian customers as gifts, thus avoiding customs duty, and GST.

Other amendment plans

  • Central Board of Indirect Taxes and Customs (CBIC) is considering putting an annual cap on the number of gifts an individual can receive from abroad.
  • Might be done by linking receipts to a citizen’s Aadhaar or passport number, ET had reported.
  • CBIC in touch with customs officials to curb e-commerce imports that are evading levies through the CB-12 and CB-13 route.
  • Overseas etailers increasingly misusing CB-13 low-value imports route as customs officials crackdown on CB-12.

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