'Handle Tax Issues Yourself': Vendors tell channel

Bengaluru: The Association of Information Technology (AIT) organized a fellowship meet — Connect to Grow - in Bengaluru on August 6, 2009. During the meeting, Dhananjay, past president of AIT, who moderated the AIT fellowship meet, initiated the discussion on all-round sharing of taxation penalties. He mentioned that in case there is a burden arising out of application/interpretation of tax laws, the fair practice will be sharing it across the ecosystem.

Throwing open the discussion he said, “There is a service tax issue on over riding commissions (ORCs). With no help from principals, systems integrators and resellers will be clearing the backlog for maybe next five years and in some cases ten years. Growth in such a situation becomes a myth. Can we expect a stimulus package from vendors?”

While replying to the question by moderator, panelist Atul Mehta, CMD of Compuage Infocom, said, “This is definitely a problem. We are looking at taxation closely to avoid such problems in future but we definitely do not have funds to bail out.”

Nandakumar, DGM South II, Ingram Micro India said that it will be difficult for Ingram to accept debit notes for service tax. He further said that tax laws in India keep changing and one cannot take chances with them.

When questioned about the same Manoj Grover, National Channel Marketing Manager, HP India Sales, said, “We have our own problems with government and we are too busy to even talk about helping partners.”

Deepak HS, MD of Laptop World, insisted that if it becomes a major problem, vendor and distributor bailout is a must. Reacting on the statement by vendor and distributors and giving past precedence Jayesh Mehta, President of AIT said, “About two years ago, we won a case in the Supreme Court against commercial tax department related to turnover tax and RST. Then, definitely there was support from the vendors' side. We seek more intense support from the vendors while facing the issues faced by the channel community currently.”

Expressing his disappointment over the statement made PN Prasad, President of Confed-ITA said, “Many fear that this tax issue will wipe them out of their business. Vendors should realize that the channel partners have been a great support to them in their business and have been associated with them for so many years. They just cannot be ignored like this. Vendors should have a sympathetic view towards the channel and bail them out. This aside, all the clarifications obtained from the appropriate authorities must be communicated to all the partners down the line, unlike the VAT clarification regarding toners and cartridges.”