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GST Council likely to exempt small online sellers from registration requirement

businesses making e-commerce supplies with a turnover of up to  ₹1.5 crore would be allowed to opt for the composition scheme, which offers flat tax rate and easier compliance.. AFPPremium
businesses making e-commerce supplies with a turnover of up to 1.5 crore would be allowed to opt for the composition scheme, which offers flat tax rate and easier compliance.. AFP

  • Businesses that supply through e-commerce and have an annual turnover of 40 lakh ( 20 lakh in north-east and hilly states) may be exempted from registration requirements under GST

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New Delhi: To encourage online retail, the GST Council is likely to exempt small entities making supplies through e-commerce from mandatory registration requirement and allow them to opt for composition scheme. This will bring them on a par with offline players by providing a level playing field.

Businesses that supply through e-commerce and have an annual turnover of 40 lakh ( 20 lakh in north-east and hilly states) may be exempted from registration requirements under GST. Similarly, businesses making e-commerce supplies with a turnover of up to 1.5 crore would be allowed to opt for the composition scheme, which offers flat tax rate and easier compliance.

Currently, suppliers supplying through e-commerce are required to take compulsory registration even if their aggregate annual turnover is below the threshold limit of 40 lakh or 20 lakh, whereas those who operate offline are allowed exemption from registration. Entities supplying through e-commerce also cannot avail the composition scheme.

The GST Council will meet on June 28-29 in Chandigarh after a gap of more than six months.

The law committee has proposed changes in the GST law to encourage small businesses to digitalize and adopt e-commerce. The move is aimed to create employment and business opportunities in rural and semi-rural parts of the country as well.

The GST secretariat received a slew of representations from the business associations, and government departments to create a level playing field between online and offline players under GST, especially as e-commerce has emerged stronger post pandemic.

“….parity ensures between online and offline businesses will give a major push to Ease of doing business especially for micro and small businesses, artisans and women entrepreneurs working from homes by enabling them to sell their products through ECO platforms. Such on-boarding of the smallest of the MSMEs on to e-commerce platforms would yield rich dividends in terms of opening up employment and business opportunities to small and micro enterprises in remote areas of the country," said the agenda note.

Representations received by the government on the issue pointed out that the mandatory registration requirement for every supplier supplying goods through e-commerce, irrespective of the aggregate annual turnover, has resulted in huge disparity between online and offline sellers. 

Online sellers, even if having aggregate turnover well below the threshold limit, are required to get compulsorily registered under the existing provisions of CGST Act, thereby discouraging MSMEs, including small artisans and women entrepreneurs, from supplying goods and services through e-commerce.

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