GST has not made sellers move away from e-commerce: Amazon

Signups of new vendors on its platform have remained strong in months leading up to GST, says Amazon

E-commerce giant Amazon has said it has not witnessed any dropoff in sellers registered on its platform in India due to the July 1 roll-out of GST, putting to rest the concerns that the country's new tax regime might hurt online retail.

Further, the company said signups of new vendors on its platform have remained strong in the months leading up to GST, indicating that sellers continued to view the online channel as a lucrative mode of business, rather than adopting wait and watch tactics.

"We have started tracking how the sellers' inventory in the warehouses looks. Has there been a drop? How are sales doing? All those indicators are currently looking very strong, so the transition has not really moved any sellers away from e-commerce," said Vivek Somareddy, Director, FBA & Seller Flex at Amazon.

Amazon, which claims to have over 200,000 sellers registered on its marketplace in India, says it has managed to keep almost its entire seller base intact through the rollout of GST. It says part of this has been possible through an extensive campaign to educate sellers about GST and ensure they are compliant.

The company says it began educating sellers about GST four months prior to its actual roll-out, giving sellers enough headway to hash out any of their doubts and queries. The last leg of this GST promotion, Amazon has setup sixteen offline centres across eleven cities where sellers can walk in, meet experts, and have their queries about GST answered.

Another reason why sellers on e-commerce are better prepared for GST according to Somareddy is due to higher standards of compliance players such as Amazon have always followed. "On e-commerce, sellers have already been compliant, because we would register every sale, so it's just pre-GST and post-GST, nothing much has really changed," he said.

While it is expected that the entire transition to GST will take another two to three months, Amazon says the move will not hurt sales. For sellers who have not yet registered themselves with GSTN, the leeway given by the government to differ initial filings upto a certain period will ensure they do not drop off even temporarily.

Amazon also counts the government's decision to not immediately levy 1 per cent tax collected at source from e-commerce sellers as a big win. The move it says will ensure no sellers have issues related to working capital, removing yet another hindrance that could have seen a few sellers drop off.

"TCS would have been a little bit of a difficulty, especially when you are transitioning from one tax regime to another where you have to learn so many things. We are very grateful to the government for having listened to the industry and giving a deferment to the TCS, because of which the transition has been easier," added Somareddy.

Overall, Amazon is extremely positive that GST will bring benefits to e-commerce in India. The single tax regime eliminates hurdles for the sector such as entry tax that states had begun to levy and will also make the flow of goods between state lines easily, increasing the overall efficiency that e-commerce brings to the table.