Exempt small suppliers making interstate deliveries in e-commerce from GST registration: GTRI

The think tank Global Trade Research Initiative (GTRI) proposed on Monday that small suppliers who ship their products between states via e-commerce should be exempted from goods and services tax (GST) registration if their sales exceed the threshold does not exceed, as reported by the Press Trust of India (PTI).

The GST Council has already exempted small businesses making domestic supplies via e-commerce platforms from GST registration provided their turnover is less than Rs 40 lakhs for products and Rs 20 lakhs for services. This regulation applies from October 1 of this year.

GTRI has suggested that these rules should also be extended to interstate deliveries for micro and small businesses selling through e-commerce platforms.

GTRI co-founder Ajay Srivastava said that in the current situation, a small village artisan with an annual turnover of less than 10,000 rupees who sells hardware through his website has to register for the GST, pay taxes and file regular tax returns despite his small turnover . However, if the handyman confines their business to a specific state, they will not have to pay GST but could lose potential revenue.

“India is poised for a big surge in e-commerce exports in the next few years. Enabling easier interstate sales will be the first step in that direction…GST regulations should be the same for intrastate and interstate shipments,” Srivastava said.

In addition, according to the statement, GTRI has also proposed joint GST registration for companies operating in different states. In this scenario, if a company is present in 10 states, it must have a different registration in each of the 10 states, which complicates the compliance process.

“Because all shipments are logged online by GSTN, GSTN can extract accurate country-specific records from the pin code of the point of delivery without having to collect information from the companies,” Srivastava said.

In addition, GTRI proposed that state GST credits should be transferrable between states. For example, if a company has excess SGST balances in Uttar Pradesh, it can only use that excess in Uttar Pradesh in another state. This constraint leads to a credit freeze and affects the working capital of MSMEs.

“Restricting use leads to capital blockage… Allowing interstate use of SGST credit will not dilute a state’s tax due,” Srivastava said. These changes would provide companies that operate in multiple states with more flexibility and efficiency, boost interstate trade and investment, and boost economic growth, he added.

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