The government’s decision to exempt small-and-medium sellers from compliance burden for online of goods within the state may be a limited benefit. That’s because the scheme is not applicable for sales of inter-state sales of goods.
The Goods and Services Tax Council recently decided that small and medium online sellers can avail the composition scheme and exemption from GST registration provided their turnover is within the prescribed limit. Earlier, only offline sellers could avail this benefit.
The composition scheme offers the benefit of paying a certain fixed percentage of the annual turnover as tax.
A registered seller whose aggregate turnover in the preceding financial year has not exceeded Rs 1.5 crore, can avail the scheme. The limit is Rs 75 lakh in some smaller states. However, the seller going for this option forgoes the right to collect GST from customers, issue taxable invoice, and claim input tax credit on their purchases.
A Central Board of Excise and Customs document showed that such taxpayers only has to file a simple quarterly return, and thus avoid maintaining elaborate accounts and records.
Earlier, this scheme was not available to sellers participating through e-commerce platforms.
However, to establish a parity between online and offline businesses, the GST Council has included intra-state supplier through e-commerce platforms.
While the clause seals an administrative loophole, it reduces the benefit to sellers, according to Bimal Jain, indirect tax chairperson of industry lobby PHDCCI.
An online shopper in one state can buy goods from a small vendor in another state with the e-commerce operator acting as a facilitator and delivery partner, Jain said. “It is difficult for suppliers or vendors to supply through e-commerce platform and not sell inter-state,” Jain said. “Only a small fraction is intra-state supply.”
Most vendors and suppliers through e-commerce platforms are engaged in inter-state supply and they won’t get the registration exemption or the composition benefit, he said.
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