Who doesn’t likes to shop online? Whether you’re a mom, home-maker, office-going, or a teenager, there is something for every one of us on online shopping platforms. E-commerce has become one of the most booming sectors in India due to the quality of the products, and the convenience it provides to the customers. That’s the reason why more and more people love to invest in buying stuff from such platforms.
However, after the GST implementation, everybody is keen to know in what way the e-commerce will get affected. Whether the consumers will be benefited or they will be charged more for the products they buy, on the other hand, the sellers are curious to know about the affects they have to bear after GST. The Government has introduced specific GST rules, laws and provisions for e-commerce companies that they have to follow.
In this blog post, we list four points reading which you;’ get an idea about how GST is going to affect the e-commerce industry.
1. No Trade Barriers
As we all know that GST follows the rule of ‘one nation and one tax’, same will be the case with the e-commerce businesses. There are certain GST rules made specifically for the e-commerce according to which there are no trade barriers imposed when the goods are transported from one state to another. It means that there will be only one tax levied on the products that are GST whereas, in the previous taxation system, each State determines its own tax rates according to the type of products. Due to this reason, the seller used to pay the tax twice. However, after the GST, such trade barriers will be ceased and there will be one destination tax.
2. TCS (Tax Collection at Source)
Under the GST, it’s mandatory for all the e-commerce businesses to collect tax from the suppliers on the purchase of goods at the rate of 2% as TCS. Such a charge needs to be deducted from each supply in each state and need to be deposited according to the law. This is one of the challenges that the e-commerce sector has to face as it might discourage the consumer to make further purchases through e-commerce operators. Although it is not applicable on all goods including the inventory based on models when the e-commerce industry conducts sales through their own inventory. The key point to make this law is that everything will be well tracked by the Government about who sells and who consumes via e-commerce.
3. Increased Compliances
The e-commerce businesses, after the GST implementation, have to report the data of their entire supplies and the TCS which have been collected every month. The sales that are reported by the seller at the end of the every month must match with the sales declared in the invoices. Any differences which are seen will be added to their turnover and they’ll be liable to pay GST on such additional charges. According to e-commerce GST rules, the operator has to report the applicable rates on each item and the entire information about the product or service codes. This way, Government is able to keep a track of the number of sales done by the seller and the TCS is deducted at the right value. At last, the operators have to register in each State and file reports at the end of every month. Therefore, this entire process is challenging for the operators as well as the consumers.
4. Mandatory E-commerce Registration
E-commerce businesses irrespective of the turnover they make, they have to get registered under the GST law. The major issue that comes across their way is that they cannot even get registered under the composition scheme if their annual turnover is below 75 lakhs. That’s the reason most small-scale e-commerce businesses are planning to quit as they cannot bear the huge taxation amount and registration in each state and pay higher taxes every month.
The Final Word
Though the entire online shopping process is way much easier for the consumers, after the GST implementation it might get a bit complicated as the consumers have to pay a bit more for their purchases. If we talk according to the seller’s point of view, the entire GST regime has several advantages too including the GST online portal that makes the tax filing and return filing much easier and simpler.