E-commerce in India has been booming at an exponential rate for the last few years. Though the penetration of e-commerce is still low in our country as compared to US and China where the e-commerce penetration is as much as 80% and 50% respectively, but still it is growing at an unparalleled rate. India has an internet user base of more than half a billion and internet shopping has become a favorite of many due to variety of products offered, competitive discounts, easy accessibility, and convenience. E-commerce giants in India like Flipkart, Snapdeal, Amazon, etc. have been cashing in on the opportunity. The industry thus has lots of hopes from GST and id keeping tabs on GST latest news.
Let us see how the new and unified tax regime going to impact the e-commerce industry of India.
GST Impact on e-commerce
Business news says that all the businesses that carry out e-commerce are expected to register themselves under GST. E-commerce sellers will get a certain percentage amount (1% mostly) deducted as GST which is also known as Tax Collection at Source which may impact their liquidity and cash flow. However, as per GST latest news, it is said that for smooth roll out of GST, government has postponed TCS and has also exempted the registration of smaller companies that has a turnover of less than Rs.20 Lacs.
The new tax reform, GST will facilitate the new entrepreneurs to enter the market easily due to the absence of multiple VAT registrations and clearances on other taxes. According to GST news, GST will also speed up inter-state movement of goods which will help the companies in doing faster and hassle-free deliveries which may increase customer delight and the sale. For smaller e-commerce companies, it was difficult and costly to pay state-wise entry taxes at check posts which is not the case under GST now as the GST subsumes the entry level taxes on state borders.
Another big advantage is in the department of logistics and warehousing. Until now the companies had many warehouses to avoid central sales tax (CST) and entry-level state tax which led to increased cost of operations and hence lower profitability. Under GST now, there are no state-wise levies and now company can have warehouse in strategic locations which will decrease their logistics and inventory cost.
GST latest news also points out that since GST will replace 17 indirect taxes, it will become easier for e-commerce to follow the compliance. Also, since the different products will fall in same tax bracket, it will be easier to calculate tax on different products.
Looking at the downside, there are many doubts and confusions due to new tax laws. Cash on delivery (COD) and cancelled orders will be complicated now. E-commerce companies will find it difficult to apply for refunds for cancelled orders on which CST has already been charged which will increase compliance too. There will also be a dual control of state and central government under GST.
The GST latest news has signaled that with the implementation of GST, both the e-commerce businesses as well as the consumers will get benefited.
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