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Traders’ body wants 5% tax on e-commerce players

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The Federation of All India Vyapar Mandal (FAIVM), a pan-India body of traders and retailers, has recommended that the government impose a tax of 5% on e-commerce companies such as Amazon and Walmart-owned Flipkart. FAIVM, which claims to represent 2 crore traders across more than 18 states, said that the traders’ community is going through “a miserable state after demonetization and complex GST”. Online e-commerce has further fueled the question of survival for the nation’s brick and mortal trade, it said in a Budget wishlist released on January 4.

“To curb online business, the government should bring a law and impose a special tax at the rate of 5% on online sales so that small shopkeepers can survive,” the traders’ body said. The body has a presence in over 18 states, including in Delhi, Gujarat, Maharashtra, Andhra Pradesh, and West Bengal and Northeast India.

VK Bansal, the organisation’s national general secretary, explained that there is huge investment required in setting up a brick-and-mortar store, but a vendor listing on Amazon technically does not have to incur significant cost. Earnings can now be made online, without substantial investment, thus ruining a balance between retailers, he explained. Traditional marketplaces need to be sustained for employment generation, he said. Although the government cannot change consumer behaviour, it can create a balance through levies and policies, Bansal added. 

When asked about how the 5% rate was arrived at, Bansal said it has no logic, but introducing this nominal amount of tax to begin with will create a sentiment that the government supports traditional retailers, he said, adding that it will also bring some extra revenue to the government. 

Registered in 2017, FAIVM’s stated objective is to liaison with central and state government and local bodies for the benefit or traders, manufacturers, hawkers, and service providers; to influence relevant legislation, among other things. Jayendra Tanna from Gujarat is the current national president.

The organisation said it has lobbied the government to waive Merchant Discount Rate (MDR) on digital payments and played a “major role in formulation policies for e-commerce”.

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