Incensed by the curbs, several top online e-commerce portals have cancelled deals to clients in Kerala

Commercial sales tax regulations, recently made applicable to e-commerce operators in Kerala, are set to impact the online sales volumes in the State.

The curbs are likely to erode the online customer base in Kerala, considered a consumer State with a large NRI population. The commercial taxes department had made interventions in recent months in the online shipments coming to Kerala.

Cash on delivery, a popular mode of the online deal, is considered by the State taxes department as a sale taking place in the State and hence taxable. A case pertaining to tax evasion, registered against a courier company, had gone to court and a verdict was awaited, a senior official of the tax department said.

Incensed by the curbs, several top online e-commerce portals have cancelled deals to clients in Kerala. These portals identify Kerala cities through the postal pin code and the deals are blocked on the ground that the destination is unserviceable.

Throwing light on the plight of the online shopper, Sooryajit, a Technopark employee, said customers in Kerala were at the receiving end as they were getting merchandise at attractive rates, considerably less than the market prices.

Laptops were cheaper online by about Rs.5,000. The customer could make quick comparisons online and user reviews were also available, he said. He suspected an insidious role played by some local dealers behind the bar on Kerala as the online sales had been eating into their revenue.

The opportunity has been seized by several retailers in the State to sell FMCG products online. In fact, online sales had already been doing well, according to several local players. QRS Online, part of the QRS retail group, has been growing 30-40 per cent annually ever since the online business started a few year ago, said C. Dinesh, General Manager of the online wing. “We are not competitors to online sites such as Flipkart or Snapdeal. We offer merchandise at the market price; delivery is limited to Kerala now; it might be extended in future,” he said.

Prices are not comparable to offers available at popular online shopping sites, agrees Ancy Paul, an employee of White Mart, another group offering online services. The group has outlets in Kerala and Tamil Nadu and plans to expand the reach to other States.

It is not easy to run business in the online mode, says John Mathew, marketing in-charge of SuperShopee.com, an online portal offering grocery, based in Thiruvananthapuram.

There are a host of other shopping entities ready to enter online space, but it will be a herculean task for them to reach a wide client base.