The government may look at introducing a prepaid tax and customs model for cross-border transactions, an Economic Times report said. It could make purchases from popular Chinese shopping websites like Shein, ClubFactory and other foreign e-commerce platforms costlier.
The ET report said that the prepaid customs and IGST (integrated goods and service tax) model could make the products costlier by 50 percent and that the government has sought recommendations from stakeholders.
The proposal comes after several products shipped to India evaded tax implications via to the gift route. Last year, the tax authorities observed that foreign e-commerce vendors had sent deliveries to customers in India as duty-free "gifts and samples" valued under Rs 5,000 by misusing the postal gift channel for commercial purposes. Gifts received by Indians from abroad are tax-free up to Rs 5,000 in value.
To control this, authorities went as far as to modify Foreign Trade Policy to ban all shipments coming into India from e-commerce sites through the gift route, except life-saving medicines and rakhis.
The government wants customs department to open its own payment interface for an e-commerce platform to integrate with, wherein the vendor will submit transaction details, deposit taxes/duties and receive a receipt as well as a transaction reference number in return.
The e-commerce site will have to collect duties from customers and pay to the government through the interface or an Indian entity which is a partner of the foreign platform could deposit the required taxes on their behalf.