Summary: In order to get hold of the ways with which GST will wield a severe blow on the e-commerce sector in India you will have to go through this piece to help you get a clear understanding of how things would be in the near future.
By the end of 2020 the e-commerce market in India will breach the US$100 billion mark and with such a huge expectancy from e-commerce market places in India it is important to ascertain how GST bill will have an impact on the e-commerce market. In this blog you will come in contact with the facts and figures with which the e-commerce business will be affected post the GST.
GST will impact the e-commerce market places in the following way
No Threshold for GST Registration: As the GST came into force the government was quick to capitalize on the appeasement politics by setting up a minimum threshold level based on which the registration and application will function. The threshold has been fixed at 20 lakhs for services, an income above 20 lakhs for serviced rendered will meet with GST compliant modules. But such threshold has not been given to the e-commerce sellers. The e-commerce sellers are not governed by any threshold limit for the income rather they will have to be registered for whatever amount of sales and business they are making and subsequently they will be taxed.
No benefit under Composition Scheme: The government has engineered a composition scheme to motivate and promote start-ups and new ventures to make certain that they will not have to file for the returns every month. But such a scheme will not be applicable for the e-commerce webstores. They will have to regularly file for the returns and the rate of interest will also be not as marginal as for the small businesses and startups that are taxed at 2%.
Tax Collected at Source Mandatory: Unlike small businesses and e-commerce ventures, the market places will have to comply with the tax collected at source setup in which they will collaborately collect the taxes and if they do so then they will be able to claim for the Input Tax Credit. If they are paying taxes on monthly basis it will adversely impact their working capital cycle with little or no funds left to manage the business operation. This will most likely reflect with low investment and business run out time.