With the press of a button at midnight in Parliament’s Central Hall, India switched to GST, the single biggest tax reform undertaken by the country in 70 years of independence. GST, which will replace more than a dozen central and state levies like factory-gate, excise duty, service tax and local sales tax or VAT. We at Finplus eCommerce would like to give a brief overview on how this is going to impact eCommerce market and what an ecomm business need to know of the bill. We have with us GST experts who will enlighten us with their views and GST impact on the sector.
On the panel, we have CA Dhiraj Khandelwal, CA Ravi Kudal, CA Rahul Murarka. Let us introduce our panel and start with the discussion.
Mr. Dhiraj Khandewal is practicing Chartered Accountant. He is a Central Council Member of ICAI and Vice -Chairman Board of studies of ICAI (The Institute of Chartered Accountants of India).
Mr. Ravi Kudal, Founder, Director at FinPlus eCommerce and a Chartered Accountant with a diversified pool of experience of different business for over 2 decades.
Mr. Rahul Murarka a Chartered Accountant and GST expert having worked with PWC and Deloitte in the field of indirect tax.
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1) How would GST affect the eCommerce sellers?
If you are an online seller or a prospective online seller and already have a VAT number, you are required to register for GST (Goods and Services Tax). The enrollment process is entirely paperless which means that it will take place online or digitally. There will not be any hard copies or physical print outs required for the enrollment. Once registered you will be required to undertake regular compliances under GST (like filing of monthly/annual returns), Also a registered dealer can avail input tax credit (set off) of GST paid at the time of purchase of goods or services or both.
2) How have the sales been before and after the GST bill?
The temporary GST impact is expected to owe to expected price hike of certain products, delisting of non-GST compliant sellers, reduced consumer demand and less supply of fresh inventory. I cannot quantify the impact at this point in time but all I can say is that impact if any would not last long and once we see the real benefit of GST flowing within the system we will see a rise in overall economy business.
3) What is ‘Tax collection at Source’ (TCS) provision for ecomm business?
Similar to TDS concept under income tax act, TCS is introduced in GST regime as well. E-commerce aggregators are made responsible under the GST law for deducting and depositing tax at the prescribed rate from each of the transaction. However, as of now, this has been kept in abeyance till further notification.
4) After the advent of the GST, stricter laws have been made; both for the sellers and the operators. How will it benefit both parties in the long run?
CA Dhiraj :
GST will ensure compliance with free flow of credit and be single tax across India will remove cascading effect of taxes on account of CST, Octroi, LBT, etc. With GST there will be an easy movement of goods between states. GST impact will remove several states paperwork requirements for commercial goods being delivered. From a consumer standpoint, an effort has been made to keep the GST rate at the same level as was in the pre-GST impact regime. With no cascading of taxes and the free flow of credit, the benefit is expected to be passed on to the customers. So GST over a long run will increase the purchasing power of the end consumer.
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5) What should be some marketing strategies you should inculcate while the GST period?
Any benefit arising out of GST impact should be passed on to the customers. This will not only ensure compliance with GST laws but will also help gain customers trust and increase revenue for the business by way of increased volumes.
6) Can eCommerce seller avail benefit of composition scheme under GST?
The government has introduced a composition scheme under GST law aimed to reduce the burden of compliance for small and medium businesses. This scheme allows businesses to file returns quarterly instead of monthly and pay taxes at nominal rates up to 2%. However, GST law has explicitly excluded e-commerce businesses from this scheme, hence ecomm sellers cannot avail of this benefit.
7) What piece of advice would you like to give it to the seller?
Ensure regular and maximum compliance and no sale/purchase to be made without an invoice. Also, payment of taxes on a regular basis is of utmost importance.
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8) How should one brand their products in the early period of GST?
Companies should ensure that they are GST compliant as going forward customers would prefer to deal with GST compliant companies and also buy products from the company whose rating under GST is decent.
That was a brilliant discussion on the impact of GST on the online marketplace. We are thankful to our panelists to take out some time off their hectic schedule and join here at our discussion.