Know why UP has become Snapdeal, Flipkart and PayTM’s worst nightmare

A tax rule by the Uttar Pradesh Government is costing hundreds of crores of potential business to e-commerce firms such as Amazon, Flipkart and Snapdeal.

The rule, which asks for a VAT declaration for products exceeding Rs 5,000, has forced these companies to almost stop shipping expensive items to their consumers in the country's most populous state.

The diktat was started about six months ago and mandated online buyers to file a VAT declaration and also declare the registration number of the vehicle that brings the products from outside the state. This has almost ended online sale of valuable items in Uttar Pradesh, which is a huge and untapped market.

This rule has not gone down too well with the consumers either, as they have to let go of the attractive online offers and can’t buy smartphones and gadgets which are only available online.

In a bid to overcome this obstacle in their otherwise uninterrupted sales, some e-commerce marketplaces have decided to increase their seller base and warehouses in UP, so that they can deliver within the state.

Sudhanshu Gupta, head of Paytm marketplace, told ET that they have enrolled about 3,500 sellers in the state in the last couple of months, with around 1,000 sellers in Noida and about 650 in Ghaziabad.

Image source