Bengaluru, July 1 

E-commerce companies such as Flipkart and Meesho have lauded the GST Council’s move to relax GST registration norms for small businesses. 

According to Vidit Aatrey, Founder & CEO, Meesho, an estimated 5 crore MSMEs were unable to sell online due to compulsory GST requirements. The recent move by the GST Council will prove to be an enabler for millions of small units, including artisans, boutiques and mom-and-pop stores.

“For example, in 2022, about 60 per cent of small businesses looking to come online on Meesho dropped off on account of GST requirements. 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. This step brings much-needed parity between offline and online businesses,” Aatrey added. 

The Chief Corporate Affairs Officer, Flipkart Group, Rajneesh Kumar said, “This decision by the GST Council to bring parity for sellers on e-commerce platforms is commendable. This will reduce the compliance burden for small businesses, especially artisans, weavers, handicrafts makers, artists and home makers, to access markets through e-commerce and smoothen their on-boarding on these digital platforms. This decision will encourage and provide a boost to the digital India agenda of the country, besides helping these small businesses grow and prosper.”

On June 29, the GST Council approved a proposal to relax compulsory registration norms for small businesses that sell on e-commerce platforms. Composition dealers would also be allowed to make intra-state supply through e-commerce operators. These changes will be notified with effect from January 1, 2023. GST officials estimate 1.2 lakh small taxpayers would benefit from the relaxation on registration requirements.

Currently, businesses selling on e-commerce platforms have to get a mandatory registration, even if their aggregate annual turnover is below Rs 40 lakh/ Rs 20 lakh. Whereas, offline sellers with an annual turnover of up to Rs 40 lakh/ Rs 20 lakh are exempt from registration. The Rs 20 lakh and Rs 10 lakh thresholds on aggregate annual turnover are for select states, which includes the North-East.