India has already gone through the Goods and Services Tax (GST) reform, which hails as a revolutionary step in changing the overall tax structure in the nation. Like all the other business segments, the e-commerce industry has also been affected by the reform. As an e-commerce marketer or entrepreneur, you need to have an idea of the different reforms that are in place and change your business objectives accordingly.
On a high level, it seems that the concept of single taxation through GST will prove to be beneficial to the e-commerce businesses in the country. Compared to the other tax policies, this is transparent and comes without red-tapism. It is also expected to open better avenues for small and medium online businesses at the national level. Now, businesses are no longer under the burden of multiple taxes.
GST has reduced the scope for fraudulent activities in the e-commerce business. Under the new GST scheme, businesses need to register to get the benefits mandatorily. Whether your business falls under the 20 lakh slab or not, you have to register with the tax authority.
Easy to file returns:
E-commerce sellers are also not under the purview of the composition scheme. It means they cannot file quarterly returns even if they have a turnover of under 75 lakhs. Moreover, they are liable to a deduction of 2% TCS on the net value of the sales. The main objective of this step is to prevent misuse by fraudulent sellers.
When it comes to filing the GST returns, e-commerce businesses will need to follow the same procedure as other businesses. According to the new GST scheme, the e-commerce operator needs to collect the amount at 1% (0.5% CGST + 0.5% SGST) of the net value of supplies. The key objective of this scheme is to encourage e-commerce operators to follow GST regulations. It also helps the government to track the e-commerce businesses.
In case, the sales value that has been reported by the e-commerce operator does not match the sales declared by the supplier at the end of each month; the difference adds up to the supplier’s turnover.