1 hr ago
GST Council Proposes Easier Rules for Small Online Sellers
The GST Council proposed making it easier for small businesses to sell goods online in more states.
A qualifying seller could use an online platform’s warehouse as a business address in a state where the seller has no physical shop or office.
The seller would still need a physical presence in at least one state and must stay under a monthly input tax credit limit.
The Council also proposed letting computer systems handle some tax refunds and registration changes.
It wants clearer rules about when online platforms must pay GST for services and deliveries.
Some deliveries made through platforms would have a proposed 5% GST rate.
The Council also proposed treating transfers of intellectual property rights as services.
These are proposals and will need to take effect through the relevant rule changes.
The Council said it did not change tax rates at this meeting.
Small online sellers could use an e-commerce operator’s warehouse as their principal place of business in states where they have no physical presence.
The proposed simplified registration is limited to sellers passing on no more than Rs 2.5 lakh in input tax credit monthly and would apply only to platform sales.
The Council proposed automatic refunds of excess electronic cash ledger balances and online approval of many registration changes.
Proposed amendments would make platforms liable for GST on specified services regardless of their commercial model and set a 5% rate on certain platform-related deliveries.
The Council also proposed treating temporary and permanent transfers of intellectual property rights as services; it said no rates were changed at the meeting.
- Who
- The GST Council, online sellers, e-commerce platforms and delivery partners.
- What
- The Council proposed simplified registration for eligible small online sellers, automated tax processes and clarifications to GST treatment of platform services, deliveries and intellectual property transfers.
- Where
- India.
- When
- The proposals were announced on Thursday; the article says the seller-registration mechanism takes effect once the new rule is notified.
- Why
- To ease compliance for small sellers and clarify inconsistencies and ambiguities in GST treatment.
Council’s proposed treatment
Platform interpretation
GST liability for platform services
Council’s proposed treatment
The Council proposed clarifying that platforms are liable for GST on notified services, including local deliveries, regardless of their commercial model.
Platform interpretation
Some platforms, particularly in ride-hailing, have argued that under subscription and recharge models they are technology providers, while fares are paid directly to driver-partners.
Potential effect of the proposed delivery rate
Council’s proposed treatment
The Council proposed a 5% GST rate without input tax credit for specified goods deliveries through platforms.
Platform interpretation
Tax expert Ikesh Nagpal said the rate could lower delivery charges, but embedded input taxes may limit savings for consumers.
Key facts
- Monthly eligibility limit
- Eligible sellers must pass on input tax credit of no more than Rs 2.5 lakh per month, excluding stock moved between their own registrations in different states.
- Seller presence
- A seller must have a physical presence in at least one state.
- Registration scope
- The proposed special registration would cover platform sales only, with one such registration per PAN in a state.
- Seller share
- The Council said more than 90% of sellers supplying through platforms pass on input tax credit below the monthly limit.
- Proposed delivery tax
- A 5% GST rate without input tax credit is proposed for delivery of goods supplied or ordered through an e-commerce platform.
- Platform liability
- The proposed clarification would make platforms liable under Section 9(5) for notified services irrespective of their commercial model.
- Rate changes
- The Council said no rates were changed at the meeting.
Quotes
Sachin Agarwal
Tax partner at EY India.
“Automated refunds for excess cash ledger balances will directly unlock trapped TCS funds, significantly easing working capital. Combined with automated amendments to quickly update registration details like dark stores, these reforms boost operational agility.”
financialexpress.com
“The simplified registration framework for small e-commerce sellers can unlock wider market access, while automated refunds will release critical working capital.”
financialexpress.com
Sources
Related news
GST Panel May Ease Rules for Small E-Commerce Sellers
GST Council Weighs Sweeping Compliance Reforms for Businesses
GST Council Eases ITC Risks and Interstate Rules for Sellers
GST Council Weighs Arrest, Notice and E-Commerce Reforms
GST Council Weighs Major Compliance Relief for Businesses
GST Council Approves Major Overhaul, Keeps Tax Rates Unchanged
Supreme Court Orders Six Measures to Improve Delhi-NCR Women’s Safety
Bengaluru Rapido Passenger Says Rider Fled After Crash
Woman Found Hanging in Faridabad Home; Family Alleges Harassment
