India Inc. and the GST model lawDo read our coverage of the impact of GST on e-com sector in detail here. Under the model GST law, there are certain provisions that have not gone down well with the e-com leaders in India. These are:
- No threshold for GST registration: While all other businesses have a threshold limit, e-com sellers are required to register under GST sans any such provisions.
- No Benefit under Composition Scheme: The government has introduced a composition scheme under GST law which aims to reduce the burden of compliance for small and medium businesses. Under this scheme, businesses will have to file returns on a quarterly basis and pay taxes at nominal rates up to 2%. Again, e-com sellers do not have this provision either.
- Registration in each individual state: E-com sellers will now have to get registered in every state to which they are supplying goods. This does not apply to other small and medium businesses.
- Tax Collection at Source: It will now be mandatory for marketplace operators to deduct a percentage amount as the GST liability of seller and deposit it with government. This mechanism is being termed as “Tax Collection at Source (TCS)” under the GST law. Eventually the marketplace seller will have to file monthly returns to claim the credit of TCS collected by the marketplace operator. This will also impact the liquidity and cash flow of these sellers.
Get GST-ready with ClearTaxSome experts say that a unified GST might actually help the IT industry, as it will stop states from imposing arbitrary taxes on e-com sector. Case in point, the states of Uttarakhand, Bihar, and Assam, which imposed a 10% entry tax on online purchases back in May, 2016. While the jury debates, you can take the actions necessary for your business to be GST-compliant before time runs out. Some of the key points that should be kept in mind are:
- Get your enrollment done on time. To read more about the enrollment process and its relevance, Click here.
- Plan your logistics and warehousing requirement carefully. To read our detailed guide on impact analysis on logistics and warehousing, Click here.
- Adopt such platforms, technologies which will enable your business to be GST-compliant. Click here to get all updates and access a pool of GST Calculators.