| 3 minutes read

3 minutes read

Alibaba Warns Store Closure In India Due To New Tax Rules

| Published on January 9, 2019

Did you know Alibaba Group Holding Limited, a Chinese multinational conglomerate specializing in e-commerce, retail, internet, AI and technology is also known as the second Asian company to break the US $500 billion valuation mark?

With operations in over 200 countries and territories, Alibaba is the world’s largest retailer, one of the largest Internet and AI companies, one of the biggest venture capital firms, and one of the biggest investment corporations in the world.

Alibaba’s owned online e-commerce platform called AliExpress was launched in 2010 and it facilitates small businesses to sell to customers all over the world.

Currently, AliExpress has warned its sellers of any illegal activities such as tax evasion through false descriptions on products may lead to store closure. This comes soon after Indian Govt. imposed a clampdown on Chinese e-tailers shipping products as ‘gifts’ to avoid custom duties.

What is the decision and why?

“AliExpress, as a marketplace… forbids any illegal activities by sellers on its platform”, the e-tailer responded to the imposition. He also added that any infringing seller found guilty on their e-commerce platform will be penalized to the extent of store closure. This move is a response to the numerous violations of domestic law and an increase in the number of Chinese products coming to India as gifts.

Current policy!

Avoiding custom duties and taxes bring down the prices of goods significantly. Gifts only up to INR 5,000 are free from any custom duties currently and as a result of this there has been a drastic decrease in the collection of duties and taxes by India when such goods are imported.

Who is the target?

Complaints were made against Chinese online retailers like Club Factory, Shein and AliExpress for taking advantage of the exemption from tax and duties. Products on these platforms were found to be fifty-percent cheaper than any other Indian e-commerce.

Where did it start?

The Mumbai customs department had doubts when a colossal amount of consignments of goods were made last year in December. After probe, it was found that those products were in the guise of gifts to avoid taxation and duties.

After this decision by the Indian Government, will the Chinese online retailers take necessary actions to curb this illegal activity? Because anyway, If this continues the Indian market will be greatly affected and Chinese e-commerce will continue to benefit a lot. Its high time to stop this and proper investigation should be made of the products coming to India in the name of ‘gifts’.

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