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Even as the Karnataka government drags its feet over tackling the e-commerce taxation quagmire, India's largest e-tailer Flipkart has chosen Telangana over Karnataka to set up its largest and 16th warehouse in the country.
Flipkart is opening the fulfillment centre in Hyderabad, which is spread over 2.2 lakh sq ft and is expected to ship out 1.2 lakh items every day once it becomes fully operational. The centre will have fully automated segregators, profilers to keep a tight check on quality, and automated conveyor belts for sorting inventory. The warehouse is expected to create 2,000 jobs directly and 10,000-15,000 jobs indirectly. Flipkart has pumped in Rs 400 crore to set up the 16 warehouses across the country and is looking to invest Rs 2,000-2,500 crore in the next 4-5 years to strengthen its supply chain.
Although Flipkart has three fulfilment centres located in Karnataka - one in Whitefield and two in Jigani - its choice of location for its newest warehouse is the direct result of Karnataka government's apathy in reversing the flight of capital to neighbouring states or relaxing norms for e-commerce business in the state.
"In terms of location preference, there were a few constraints in choosing Karnataka. We don't have clarity on regulatory aspects for e-commerce here (Karnataka). If there is no clarity on the e-commerce taxation, no one would want to set up warehousing facilities here. There is an ongoing dialogue with the government and we hope to reach some clarity within a few days," said Binny Bansal, cofounder and COO of Flipkart. "We were locating another place if not Karnataka, and Telangana was the next place from where we could reach majority of our customers in South India.There is clarity on taxation in Telangana. From there, we hope to reach 70% of our customers in South India in a single day," he said.
More recently, e-commerce behemoth Amazon ran into trouble with Karnataka's commercial taxes department for allowing sellers to register the fulfilment centre as an additional place of business. This led to the state cancelling the licences of many smaller merchants registered on Amazon.
Amazon has been demanding exemption on VAT payment saying its fulfillment centre only stocked, packed and dispatched products and was not doing business directly. It wants the government to collect VAT from sellers. The state says there is no provision in the VAT rules for retailers to take shared space at Amazon's FCs.
Flipkart too is seeking a clarity on e-commerce-related taxation and VAT issues. "The sellers from different states have their inventory stored here and they are being shipped by a third party like us. There are taxation concerns around that," said Bansal.
Sandeep Ladda, national leader, technology and e-commerce at PwC India, said there is no clarity on how laws are interpreted in Karnataka. "The state government should come out with a consultation paper taking all the stakeholders into consideration. VAT-related issues have been going around for quite some time. The current law states that the seller has to discharge the tax liabilities. The government should be clearer how the law has to be administered."
Source: http://economictimes.indiatimes.com...ts-largest-warehouse/articleshow/49224293.cms
Best things to happen to the new state: Google, Amazon, Flipkart and ACT Fibernet. Thanks to the Foundation laid by Chandra Babu.
Flipkart is opening the fulfillment centre in Hyderabad, which is spread over 2.2 lakh sq ft and is expected to ship out 1.2 lakh items every day once it becomes fully operational. The centre will have fully automated segregators, profilers to keep a tight check on quality, and automated conveyor belts for sorting inventory. The warehouse is expected to create 2,000 jobs directly and 10,000-15,000 jobs indirectly. Flipkart has pumped in Rs 400 crore to set up the 16 warehouses across the country and is looking to invest Rs 2,000-2,500 crore in the next 4-5 years to strengthen its supply chain.
Although Flipkart has three fulfilment centres located in Karnataka - one in Whitefield and two in Jigani - its choice of location for its newest warehouse is the direct result of Karnataka government's apathy in reversing the flight of capital to neighbouring states or relaxing norms for e-commerce business in the state.
"In terms of location preference, there were a few constraints in choosing Karnataka. We don't have clarity on regulatory aspects for e-commerce here (Karnataka). If there is no clarity on the e-commerce taxation, no one would want to set up warehousing facilities here. There is an ongoing dialogue with the government and we hope to reach some clarity within a few days," said Binny Bansal, cofounder and COO of Flipkart. "We were locating another place if not Karnataka, and Telangana was the next place from where we could reach majority of our customers in South India.There is clarity on taxation in Telangana. From there, we hope to reach 70% of our customers in South India in a single day," he said.
More recently, e-commerce behemoth Amazon ran into trouble with Karnataka's commercial taxes department for allowing sellers to register the fulfilment centre as an additional place of business. This led to the state cancelling the licences of many smaller merchants registered on Amazon.
Amazon has been demanding exemption on VAT payment saying its fulfillment centre only stocked, packed and dispatched products and was not doing business directly. It wants the government to collect VAT from sellers. The state says there is no provision in the VAT rules for retailers to take shared space at Amazon's FCs.
Flipkart too is seeking a clarity on e-commerce-related taxation and VAT issues. "The sellers from different states have their inventory stored here and they are being shipped by a third party like us. There are taxation concerns around that," said Bansal.
Sandeep Ladda, national leader, technology and e-commerce at PwC India, said there is no clarity on how laws are interpreted in Karnataka. "The state government should come out with a consultation paper taking all the stakeholders into consideration. VAT-related issues have been going around for quite some time. The current law states that the seller has to discharge the tax liabilities. The government should be clearer how the law has to be administered."
Source: http://economictimes.indiatimes.com...ts-largest-warehouse/articleshow/49224293.cms
Best things to happen to the new state: Google, Amazon, Flipkart and ACT Fibernet. Thanks to the Foundation laid by Chandra Babu.
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