The Finance Ministry is examining a proposal to relax GST compulsory registration norms for small businesses, which use any e-commerce platforms to sell their products. The matter is expected to be taken up in the next meeting of GST Council.
“We have received representation from various entities and it is under consideration. One option could be exemption, while other could be much lower threshold,” a senior government official told BusinessLine. Section 24 of CGST Act 2017 prescribes mandatory registration in certain cases. This includes “persons who supply goods or services or both, through such electronic commerce operator who is required to collect tax at source under Section 52.”
Section 52 says every electronic commerce operator, not being an agent, shall collect an amount calculated at such rate not exceeding one per cent.
The official said post recommendation by Fitment Committee and Law Committee, the matter will be taken to GST Council. Though date for the next meeting is not finalised, it is expected to take place next month. The GST Council meets ones in three months and last meeting took place on December 31.
Pitching for exemption
Industry and trade bodies are pitching hard for exemption from compulsory registration for small business using e- commerce platform to sell their produce. Just last week, the Confederation of All India Traders (CAIT) made a representation the Finance Minister Nirmala Sitharaman urging mandatory condition of obtaining GST registration for e-commerce supplies
Though threshold of annual turnover for mandatory registration under GST is ₹40 lakh and ₹20 lakh for goods and services, respectively, (₹20 lakh and ₹10 lakh in selected States). However, compulsory registration requirement in certain cases means a seller who wishes to sell products in e-commerce is invariably required to obtain GST number. Any seller who does not have GST number is not allowed to sell products on any e-commerce portal.
“This provision of the Act is barring not only lakhs of traders across the country from using e-commerce to sell their products but even prohibit large numbers of small businesses of artisans, craftsmen, household and cottage industry, women entrepreneurs who are conducting businesses from their home to supplement the income of the family and people of other similar sections of the society,” CAIT said.
Authentication purpose
The trade body said that it will be pertinent to remove the condition of GST number while onboarding on any e-commerce portal. For the purpose of authentication, the Aadhaar number, bank account details or similar other measures may be designated as essential qualification for on-boarding on e-commerce portals. Further it said that such a provision is badly hitting not only the domestic market but even exports are being suffered to a greater extent.
The body pitched that hat mandatory condition of obtaining GST registration for e-commerce supplies should be exempted in Section 24 and under Section 52, collection of one per cent GST tax rate may be levied on e-commerce marketplace or aggregator for all the transactions that happened on their respective platform and in this way, the government will be able to track the transactions and will also accrue tax revenue from e-commerce portals.