IBJA wants commodity exchanges to be outside GST ambit of eMarketplaces.

MUMBAI: The India Bullion & Jewellers’ Association (IBJA), which is seeking to set up a spot gold exchange, wants the GST Council to keep the platform out of the definitional ambit of Web marketplaces to make the proposed bourse economically and operationally viable. 

The law requires ecommerce operators, such as Amazon or Flipkart, to collect 1 per cent TCS (tax collected at source) and deposit the levy with a particular state for in-state transactions, and with the Centre for interstate deals. Experts believe that unless the council were to clarify otherwise, the proposed exchange and other commodity derivatives platforms qualify to be treated as ecommerce operators. 

IBJA argues that being bracketed together with a Web marketplace would make the proposed exchange, expected to help India emerge as a gold price-setter instead of a price-taker, operationally unviable. 

“Collecting 1 per cent TCS would make operating a spot exchange unfeasible,” said Surendra Mehta, IBJA national secretary and a chartered accountant himself. Mehta said the council needed to “clarify whether commodity spot electronic exchanges and, by that token, commodity derivatives segments run by the likes of NSE, BSE, MCX, NCDEX and ICEX could be termed e-commerce operators” under the central goods and services tax act, 2017. 

The council should exempt “commodity exchanges” from the definition of e-commerce operator, Mehta said, adding that he would seek clarity on this subject from the GST Council later this week. FinanceNSE -0.30 % Minister Arun Jaitley had proposed the exchange in this year’s budget speech as part of a comprehensive gold policy.

Under Section 52 of the CGST Act, an ecommerce operator, not being an agent, is required to collect 1 per cent TCS from a buyer of goods, said CA Manish Gadia of GMJ & Co.