The Karnataka Government plans to amend the Value Added Tax Act and bring transactions from e-commerce marketplaces under its ambit, reports The Times of India. The government says the amendment will deal with transactions on on e-commerce sites that follow the marketplace model like Flipkart, Amazon India and Snapdeal and it is expected to be passed during the upcoming winter session of the state legislature. Through this amendment, the government is expected to classify online marketplaces as "commission agents" since they charge a commission from third-party sellers for using their platform and their delivery & warehousing services. This classification will make them liable to pay VAT to the state government, because as per the Karnataka Value Added Tax Act 2003, direct sellers and those who sell on behalf of others and charge a commission for it, are both liable to pay tax. Amazon India's tax case This development follows Amazon India's tussle with the Karnataka’s commercial tax department on whether the seller or Amazon should pay the sales tax for all the orders through its fulfillment service. The tax department had claimed that Amazon should pay the sales tax for all the orders through its fulfillment service, since it believes that Amazon owns these goods for all “practical” purposes. Amazon however had claimed that it is just a service provider and doesn’t own goods at any point of sale, due to which it is not liable to pay this tax. Following this, Karnataka chief minister Siddaramaiah had directed the commercial tax department to study the the laws and issues related to e-commerce and…
