GST registration exemption for online seller with low turnover to boost e-commerce; industry reacts

New Delhi: The government's decision to exempt suppliers on e-commerce having less than Rs 40 lakh turnover will boost online sales of goods, industry players said on Wednesday.

The GST Council has decided to ease the process for intra-state supplies made through e-commerce portals.

Now such suppliers will not have to obtain GST registration, if their turnover is lower than Rs 40 lakh and Rs 20 lakh for goods and services, respectively. This would come into effect from January 1, 2023.

Meesho founder and CEO Vidit Aatrey said that the step brings much-needed parity between offline and online businesses.

"With an estimated 5 crore MSMEs currently unable to sell online due to compulsory GST requirements, this game-changing measure can be an enabler for millions of small units including artisans, boutiques and mom-and-pop stores. While MSMEs will benefit from a much larger addressable market, increased efficiencies and easier access to capital, the move will spur the Indian economy and unlock massive tax revenues for state governments," Aatrey said.

He said that in 2022, around 60 per cent of small businesses looking to come online on Meesho dropped off on account of GST requirements.

Flipkart, chief corporate affairs officer, Rajneesh Kumar said that the decision will encourage and provide a boost to the digital India agenda of the country besides helping these small businesses grow and prosper.

"This will reduce compliance burden for small businesses especially, artisans, weavers, handicraft makers, artists and home makers to access markets through e-commerce and smoothen their on-boarding on these digital platforms," Kumar said.

KPMG in India indirect tax partner Abhishek Jain said in line with the government's agenda to facilitate e-commerce in India, various compliance bottlenecks have been done away with for the e-commerce sector while allowing suppliers to e-commerce platforms to operate under composition scheme.

"This change will specifically help with the compliance burden of such suppliers and will invite more players in the market to route their business through e-commerce websites," Jain said.