AFTER the IT industry, it’s the Internet and e-commerce players who are demanding tax sops. In a representation to the finance ministry, the Internet and Mobile Association of India (IAMAI) is demanding a five year moratorium on service tax levied on Online Services and Advertisements. Currently, the industry is paying a tax of 12.36% on online ads and services.
“The total industry size including search, banner and classified is not more than Rs 700 crore and the quantum of service tax is, therefore, about Rs 90 crore. It’s not a large sum for the government, but a sizeable one for the industry, the exemption of which may help it grow,” says IAMAI president Subho Ray.
Larger companies avail of this medium for customer acquisition but the lower cost and targeted reach makes it the primary vehicle of advertising for SMEs and individual.
Says Times Internet (TIL) director Upen Roop Rai: “The industry is at a nascent stage. Any tax sop from the government will definitely boost the industry. On the e-commerce front, any benefit will help the small industry to get into transactional mode.”
The classified sites in India also offer individuals their basic services free unlike the print media. For example, hosting a curriculum vitae on a job site does not cost any money to an individual.
Adds Smile Interactive Founder CEO Harish Bahl: “As in the US, waving off taxes on ecommerce goods will not hurt regular retail businesses. It will increase business in remote places or in rural areas lacking in infrastructure.” Smile Interactive has incubated e-commerce businesses like Quasar media, Zoomtra.com and Tyroo which has Yahoo.com as a JV partner.
“Since the export component is minimal, it does not enjoy fiscal benefits like the software and services and BPO industry,” Mr Ray adds. The association has members such as Indiatimes.com,