The irrationality of tcs on e commerce

The irrationality of tcs on e commerce

The Goods and Services Tax (GST) Council has reduced the tax that e-commerce firms are mandated to collect at source (TCS) from the sales on their platforms all the way down to 1%. The proposal is still flawed and must be scrapped. For one, Amazon, Flipkart, etc, are barred by policy from selling their own stuff and work as a marketplace, where sellers meet buyers, providing what is called the service of fulfillment. Levying a service tax on the fee they charge for providing this service is rational. But why elevate them to the status of an arm of the government, collecting tax from others on its behalf?
e-Commerce companies are more than happy to supply detailed information about every sale that takes place on their platforms and it is up to the tax department to match this data with the tax filings of those selling on the platform. Asking e-retailers to collect 1% tax at source is meant to gather information, it might be argued. That information is already implicit in the service tax e-tailers pay on the fee they have collected for the fulfilment service. What is the problem in asking them to disaggregate the fee income and elaborate from whom and for what the fees were collected?
If the government wants e-tailers to collect and pay GST, the solution is simple. Amend the FDI norms and allow them to stock and sell multiple brands, just as offline retail does. Then again, why discriminate against online retail in terms of when they have to pay the tax? The obligation to pay tax on their sales should be identical for online and offline retailers. And the onus of compliance should be on the sellers, not on the marketplace platforms where the sales take place.
The courier companies that ferry products from sellers to buyers file returns on the tax they collect from their customers, the sellers. That is another audit trail the government can follow, in case the built-in incentive in GST for people to pay tax so as to collect input tax credit somehow does not work in the case of those who sell their produce online. TCS on e-commerce sales makes very little sense, viewed from whatever angle.