NEW DELHI: India needs to follow the Chinese e-commerce model rather than following the US model for effective taxation and integrating small vendors, especially in rural areas, suggested a noted economist Arun Kumar on Friday.
Unveiling a book 'E-commerce and GST in India' written by senior economist Astha Ahuja here, he said, "India needs to follow the Chinese model of e-commerce. They were implemented in the context of their culture. It helped connect with the rural economy and small vendors. But we are following the US (American) model".
He cited the example of Taobao, which is a Chinese online shopping platform. It is headquartered in Hangzhou and is owned by Alibaba.
Ahuja who is an Assistant Professor in the Department of Economics, Aryabhatta College, University of Delhi, said that one has to read 100 books to write a book.
"But when I wrote this book (E-commerce and GST in India), there was no book available on the subject (e-commerce). But now, if someone wants to research this subject, he or she will have the reference," she added.
On this occasion, Ahuja highlighted the challenges of taxing transactions of foreign e-commerce sites or e-marketplaces where goods or services are not delivered physically.
She cited an example of buying music by an Indian customer from a foreign e-marketplace and making payment online for that.
There is difficulty in taxing these transactions as the foreign e-marketplaces do not have a permanent establishment here, Ahuja noted.
"Since e-commerce transcends national boundaries, there are challenges as the seller and buyer belong to different tax jurisdictions. Hence, need to consider which tax principle to be applied," she said.
