India is a growing hub for e-commerce market with the estimated investment of 211,005 Crore Indian Rupees. As per the survey conducted by Internet and Mobile Association of India, it is claimed that the country is expected to generate more than $100 billion online retail revenue by the end of 2020. The implementation of GST may have many cumbersome effects on the uprising electronic commerce.
According to new GST’s Section 43B(d) of the MGL (Model GST Law), Electronic commerce is defined as the mean to supply or receipt of good and/ or services, or transmitting of funds or data, over an electronic network, primarily the internet, by using any of the applications that rely on the internet, like but not limited to e-mail, instant messaging, shopping carts, web services, Universal Description Discovery and Integration (UDDI), File Transfer Protocol (FTP) and Electronic Data Interchange (EDI) whether or not the payment is conducted online and whether or not the ultimate delivery of the goods and/or services is done by the operator.
Here’s How GST Will Change the Way You Shop From Your Computer Screen
Free Movement of Goods from One State to Another
Before GST, E-commerce operators were only registered at few centers and they have set up the distribution center in certain locations of the country. The VAT applicable sales were collected only at those selected locations and the remaining states had to face VAT loss. In order to compensate the VAT loss, the other states imposed entry tax on goods coming from another state. This means that the e-commerce operators can freely transport their goods from one state to another.
Previously, the e-commerce operators were only registered from the location they were operating from. With the implement of GST in India, it is compulsory for every E-commerce operator to register in each state and file the report separately on monthly basis. This process will increase the effectiveness of ecommerce portals as well as running the business.
Products from Large Sellers
The new rule set that all the sellers associated with the e-commerce portal must be registered irrespective of their sales limit of Rs. 20 lakh. These sellers have to pay a flat tax at the rate of 2% and have to maintain details of each product sold. After the implementation of GST, the large scale sellers can opt to offer increased range of the products through their ecommerce portals. In this way, the consumers will be heavily benefited from large scale sellers and their numerous products.
Tax collected at source
Before GST, it was compulsory for all the e-commerce operators to collect tax at the rate of 2% as TCS on the net value of sales made by sellers. This brings a significant compliance challenges to sellers and discourage them to makes sales at the ecommerce marketplace. The implementation of GST will encourage the sellers and provide a mechanism for the government to track suppliers who sell through e-commerce portals. Besides, the e-commerce operator will have to pay their associated sellers. This will ultimately enhance your shopping and will make your online shopping experience even more exclusive.
For delivery, the sellers need to file separate bills for the state tax and for the logistics which was very time-consuming. Under the GST, the good will be delivered faster as the retailers will not have to file a separate paperwork for each state.
Avoid Shopping from International Ecommerce Operator
Although the Indian Government has imposed GST for the Indian Ecommerce sector, the government is yet to clarify the GST rules for international operators including Amazon.com, Ebay.com. Thus, shopping from international portals should be avoided for precaution.
Hassle free returned and Cancelled Items
Yet another benefit for e-commerce operators as the consumers don’t have to bear the tax amount of those returned and canceled items at the rate of 18%. Although the ecommerce operators will get the refund from the government, it will heavy impact on their cash-flow.
The India On GST has provided many pros to the Indian e-commerce sector. Let’s see how we can get lucrative discounts from the giant e-commerce portals.