Digvijay Singh asks Karnataka CM Siddaramaiah to resolve Amazon tax issue

BANGALORE: AICC General Secretary Digvijay Singh has asked Karnataka chief minister Siddaramaiah to resolve the tax-related dispute with American ecommerce giant Amazon in the best “interests of both Karnataka and the Congress party“.

He is firm that the government should draw up a policy and frame rules in such a way that a seller on the technology platform of e-commerce entities like Amazon or eBay remit the value-added tax, collected from the buyer, to the government. “The government should not make the online platform providers pay the taxes,“ Singh told ET on Wednesday.

He is the second high-profile Congress leader to raise concerns on the goings on in Karnataka and speak in favour of the business model of the young business firms in the fledgling ecommerce space. Former Union minister and Lok Sabha member M Veerappa Moily has already written to the chief minister insisting that the state create a conducive climate for online business activity. Moily is agitated over taxmen's pinpricks to Amazon because its modern warehouse is located in his constituency of Chikkaballapur and its closure will leave many people jobless.

Singh, the former Madhya Pradesh chief minister who is currently in-charge of the Congress affairs in Karnataka, said he has already personally discussed the subject with Siddaramaiah suggesting that the southern state create an appropriate climate for ecommerce firms, both Indian and foreign firms, both Indian and foreign.

“I have suggested that the rules be favourably framed in such a way that a consumer in Delhi is able to buy a product from a seller based in Bangalore with Karnataka, getting the VAT revenues. If Karnataka does not create an enabling environment for ecommerce companies, then these businesses will move out of the state, and probably shift to Hyderabad, and that is not a good development,“ Singh said.

Amazon, the AICC leader said, had got a strong feeling that it had been discriminated against in Karnataka. “I requested the chief minister that their case be examined. I have said that the CM should work on this so that the taxes are not evaded, but at the same time, the ecommerce platform is not unfairly taxed. The CM has promised to look into it,“ he added.

For Amazon, it is important its problems with the tax authorities are sorted out early. The festival shopping season is just around the corner and having an empty warehouse in Bangalore is not ideal preparation for Amazon as it fights Flipkart and Snapdeal for dominance in the online retail space. Meanwhile, the local VAT officers at Karnataka's Commercial Taxes department have issued notices to 50 dealers who are registered with Amazon to sell their products through its online platform.