Ecom logistics sector seeks clarity on GST rules for delivery, GTA services

MSME-focused e-commerce platforms have warned that ambiguity over GST treatment of local delivery and GTA services is creating compliance risks, potential double taxation, and operational disruptions

India’s ecommerce logistics sector is seeking urgent clarity on goods and services tax (GST) rules following recent amendments.

 

The Forum for Internet Retailers, Sellers & Traders (FIRST India), representing more than 300 MSME-focused online platforms, has written to Finance Minister Nirmala Sitharaman, highlighting ambiguity over whether intra-state and short-distance deliveries fall under Goods Transport Agency (GTA) services or the newly defined “local delivery services.”

 

The group warned that unclear GST liability risks operational disruptions, compliance challenges, and potential double taxation, urging the ministry to issue guidance to ensure uniform treatment and safeguard small sellers’ participation in India’s digital retail ecosystem.

  “These changes have created uncertainty among transporters, aggregators and ecommerce operators regarding the applicable tax rates, liability to pay tax under reverse charge or forward charge and compliance responsibilities under the amended provisions,” said the letter sent by Sushma Morthania, director general, India SME Forum- FIRST India to the Finance Minister, a copy of which was seen by Business Standard.

  India’s ecommerce delivery ecosystem has long relied on two models. Under platform-managed logistics, ecommerce companies engage multiple delivery partners, recover charges from sellers, and pass them to customers via invoices. In the direct logistics model, providers bill customers directly and issue consignment notes, classifying themselves as Goods Transport Agencies (GTA) under GST law. Recent amendments have sparked uncertainty over how these services should be taxed, particularly intra-state or short-distance deliveries.

 

Under the amended Section 9(5) of the CGST Act, ecommerce operators must now pay 18 per cent GST on local delivery services, unless the provider is separately liable under Section 22(1). While aimed at streamlining tax collection and curbing misuse of exemptions, the change has created uncertainty. Companies are unclear whether short-distance or intra-city deliveries—including consignment notes or warehouse transfers—should be treated as Goods Transport Agency services or local deliveries subject to Section 9(5).

 

The ambiguity has sparked compliance risks, operational disruptions, and administrative confusion. Companies are unsure who bears GST liability—ecommerce operators, logistics partners, or sellers—raising the risk of double taxation and inconsistent invoicing. Differing interpretations by tax officials have added the threat of litigation and retrospective demands. Logistics providers and ecommerce platforms are now pressing for urgent clarification to ensure uniform compliance and avoid unintended penalties.

 

FIRST India sought clarity on GST rules for local delivery and Goods Transport Agency (GTA) services. Key questions include the definition of “local delivery,” the scope of the GTA B2C exemption, and whether intra-state GTA services via platforms are taxable at 18 per cent under Section 9(5). Stakeholders say ambiguity is hampering compliance, driving operational inefficiencies, raising costs, and risking litigation. They propose a phased rollout to allow businesses to adjust contracts and billing systems without disruption.

 

“We respectfully urge the Ministry of Finance and TRU to issue official clarification or a circular on the above aspects. This will enable consistent application of GST law across all stakeholders,” said the letter.