E-Commerce in India:

The internet user base in India is expected to cross 500 million in another one month. Despite being the second-largest user base in world, only behind China (650 million, 48% of population), the penetration of e-commerce in India is still low compared to markets like the United States (266 million, 84%), or France (54 million, 81%). On the flip side, the market is growing at an unprecedented rate, adding around 6 million new entrants every month.

The Model GST Law:

The Model GST Law has incorporated a separate chapter on e-commerce transactions. However, the proposed Model GST Law may result in higher compliance challenges for the e-commerce sector and open up to other issues that would require further clarity and certainty.

The Chapter defines an ‘electronic commerce operator’ to mean a person who owns, operates or manages an electronic platform engaged in facilitating supply of any goods/services or in providing any information or any other incidental services. Online retailers who supply goods/services on their own behalf are not covered under the definition of electronic commerce operator and therefore the process of tax collection at source and other requisite compliances in the Chapter will not be applicable.

How GST will have combined effect on e-commerce business:

The Model GST Law has incorporated a separate chapter on e-commerce transactions. However, the proposed Model GST Law may result in higher compliance challenges for the e-commerce sector and open up to other issues that would require further clarity and certainty.

• Large number of small sellers will claim for their set-off of the inputs, which can turn out to be a challenging task for the e-commerce players to account for

• Maintenance of the large number of the accounting records for the small sellers will generally turn into the administrative activities of the e-commerce

• ‘Destination-based consumption tax’ will have its effects on the movement of the products

a) Tax will be collected at the place of the consumption of the products and not from the place from where the products are booked/ ordered

b)This increase the additional burden for the e-commerce for maintaining the detailed accounting records of the state-wise, based on the products consumed

• GST will be paid to the respective states, and with the concept of ‘Destination-based consumption tax’, liability for the payment of GST will arise at the registered address/ shipping address of the buyer of the products

Solution to the challenges:

Udyog Software/ Adaequare is ready to offer a GST solution that can address/ mitigate all such obvious challenges coming up for e-commerce companies during the GST regime.

You can drop us a line at achakraborty@udyogsoftware.com to know more about our offering.

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Content Courtesy:

Multiple Sources in the Internet

Prepared by : GST Solutions Team at Udyog Software | November 18, 2016

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