Small traders to gain in GST relief for e-commerce sellers, transport

Easing compliance for taxpayers, the Goods and Services Tax (GST) Council has also given relief to the transport sector and small online sellers by waiving mandatory registration norms for small businesses. Changes in the law will come into force on January 1, 2023. The move will benefit approximately 120,000 small traders, officials said.

For the transport sector, the council lowered GST to 5 per cent from 18 per cent on ropeways, renting of goods carriage, including fuel cost, and even exempted the foreign component of the tour package from GST. It also allowed composition dealers to undertake intra-state supplies via e-commerce operators, sources said. 

Composition dealers are those with a turnover of up to Rs 1.5 crore. They are required to pay GST at flat rates with input tax credit. At present, sellers supplying through e-commerce operators must be registered even if their aggregate annual turnover is below the threshold limit of Rs 40 lakh or Rs 20 lakh.

Sellers who operate offline are allowed exemption from registration for supply of goods and/or services up to Rs 40 lakh or Rs 20 lakh.

“Such a move will ensure parity between online and offline suppliers, and will give a major push to ease of doing business. This is especially true for micro and small businesses, artisans and women entrepreneurs working from home,” one official said.

E-commerce players favoured the move, saying these would boost the digital India agenda of the Centre.

“This decision by the council to bring parity for sellers on e-commerce platforms is commendable. This decision will boost the digital India agenda of the country. It would also allow small businesses to prosper,” said Rajneesh Kumar, chief corporate affairs officer, Flipkart Group.

“With an estimated Rs 5 crore, small and medium industries are unable to sell online due to compulsory GST requirements. This game-changing measure can be an enabler for millions of small units, including artisans, boutiques and mom-and-pop stores, said Vidit Aatrey, chief executive officer (CEO) and founder, Meesho. However, the waiver is subject to certain conditions.

First, such businesses would be required to declare their permanent account numbers (PAN) and principal place of business. Second, for each PAN, such unregistered entities can only declare principal place of business in only one state. Such businesses will not be permitted to make inter-state taxable supplies. 

The move also addresses revenue concerns. The availability of information on supplies being made by unregistered persons (based on their PAN) through various e-commerce operators, along with other requisite checks, will only boost compliance. It would lead to revenue augmentation, the official said. 

These changes are in line with the recommendations of the GST law committee.

Such on-boarding of micro, small and medium enterprises (MSMEs) on e-commerce platforms will yield rich dividends. It would open up job and business opportunities in remote areas of the country.

The unorganised sector, especially in rural and semi-rural parts of the country, would gain immensely from these proposed measures, the source asserted.

Easing compliance

To ease the burden on taxpayers, the council has waived requirements for filing refund claims by condoning the two-year period between March 1, 2020, and February 28, 2022.

The annual return forms for FY22 will be notified with minimal changes, the sources mentioned. The GST Council is likely to extend the timeline to file GSTR-4, the annual return for the financial year 2022. Taxpayers will get time to file GSTR-4 till July 28, according to sources. The earlier deadline was till June 30. 

Taxpayers do not need to file GSTR-9 if the income is up to Rs 2 crore for FY22, the sources added. The GST Council has also decided to bring some necessary changes in GSTR-3B, the monthly tax payment form.