India has started a major crackdown on online purchases of goods from Chinese e-commerce platforms that were escaping customs duty and goods and services tax.
The government is now asking the post office and courier companies to monitor shipments from China. The Department for Promotion of Industry and Internal Trade (DPIIT) had directed all ports across India to see if the shipments were genuine gifts. The government had stopped import of goods through Mumbai and is now looking to start similar crackdown across India and other ports including Chennai and Kolkata.
Many Chinese e-commerce platforms were shipping goods ordered by Indians to various cities claiming these were “gifts”. As per the domestic laws, any gift received by Indians up to Rs 5,000 doesn’t attract any tax and Chinese retailers such as Club Factory, AliExpress and Shein were allegedly taking undue advantage of this exemption.
According to a sources, investigations revealed that around 2,00,000 orders were placed every day through Chinese e-commerce platforms in India which escaped any form of taxes, which are otherwise applicable on imports. After a major crackdown, this has come down to around 1,20,000 orders per day but it is still high and the government wants that all major ports across India intensify their checks to stop such practices.
The government recently made it mandatory for all the Chinese e-commerce platforms to register domestically to help bring them under the domestic laws. Sachin Taparia, Founder and Chairman, LocalCircles, an online platform, who had first complained to the government about Chinese e-commerce companies in 2018 said that many people were able to place orders on Chinese e-commerce sites and the goods were being delivered in India without paying IGST and customs duty which would make them a lot cheaper compared to similar products sold in India. Mandatory registration and enforcement actions would ensure that such commercial transactions disguised as gifts will further come down drastically.
