e-Commerce giants resulting in huge losses to Telugu States

Both the Telugu States have been witnessing large chunk of consumers patronising online sales of a variety of products promoted by ecommerce portals. Of late, the sales are more online due to the competitive pricing offered by the e-commerce companies. However this new age patronage is eating away the incomes of the states.

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According to the Tax laws existing currently, these companies do not pay VAT to the states of their consumers, they only pay Taxes to the manufacturing states. This means AP and Telangana will not get any VAT from these sales. Atmost they pay only service tax which is also being truncated showing less sale volumes.

On the other side, e-commerce is also seriously affecting the business of the brick and mortar traders who set up shops and carry on transactions in physical form from their premises and pay VAT. As they businesses fall, so is the VAT they pay to the state government.