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GST Impact on E-Commerce – The vision Behind it

GST Impact on E-Commerce

The GST tax also called Goods and Service Tax is a value-added tax is an indirect tax to be levied on the manufacture and sale and consumption of good plus services at the national level. It is aimed to replace the old multiple taxing systems with one unified tax, thus in more simple terms, the tax levied on the final customer consuming the finished product is known as GST. The president of India has recently passed the GST with the 122nd constitutional amendment at the parliament along with some other changes which were supported by more than fifty per cent of the state legislatures. Here, we will discuss the GST Impact on E-Commerce and vision behind GST Implementation.

Vision Behind GST Implementation

The vision behind the passing of the new GST is to restructure the taxation structure and remove all the implications of existing indirect taxes. The key highlight of the GST implementation is the obvious eradication of the multiple taxes and unifying it into one tax platform as mentioned above. GST in some ways is similar to VAT (value added tax), for instance, both GST and VAT are levied on the direct goods consuming customers, and an output tax paid is calculated through it followed by input tax credit deduction to finalize the net tax. The ultimate result of the new bill is it the riddance of many taxations and the introduction of a single tax system.

GST Impact on E-Commerce Players-

This article will talk about if the e-commerce players and the online portals should be included in the new GST policy or should be exempted from it. There’s no argument in the fact that the e-commerce players bring a smoother service flow with their ever innovative and brilliant ways of digital commerce trading. The witness of large retail companies plead for exemption from the GST tax is evident considering they are simply the service provider and should tax be levied on them then it should be individually based for the service they render. Of course, it is a compelling argument since they do play a big part in the economy of our country, not only do they pay needed tax but also create great job opportunities for the citizens of India.

Coming to the impact of actually exempting E-commerce[1] Operators under GST would also affect the economy is harsh ways. The big e-commerce players are generating millions of dollars through their services and competitive platforms and on exemption it would only be a disadvantage for the government. For instance, the customers rendering services through them would be paying VAT taxes, and the people selling goods through them, the excise duty tax, now the question arises as to why the big shots cannot pay the sum of the smaller vendors are being taxed?  How is it that they are unwilling to go with the policy of single taxation with the implied reason for not being a final consumer? The whole reason behind the new GST taxation system was crafted in due consideration of every possible factor of the country and its effect.

There may be a silver lining for the e-commerce players in the form of concessions such as lowering of tax percentage for them in particular and solely for the services sold online. The very firm-hold that they make the digital platform competitive is the very reason they cannot be released from the GST model. Hence, the best conclusion we can expect is the tax regulation timings of the government since at the moment there is no rule book laid out yet for internet retailer platforms. Despite the strongly reasoned arguments put forward to the government by the big commerce figures, the complete exemption is unlikely to occur. The policy terms, as of now stands with the taxing of online retail transactions.

This hasn’t slowed down the supporting argument on the part of the retailers. They are with the points of being intermediate figures simply playing their role of providing open platforms for the smaller players in marketing their products and in return, receiving leverages in the form of fees. According to their main view, they want to make a statement that e-commerce would include everyone owning and operating online activities regardless of direct involvement or indirect involvement and hence the bigger picture makers which are the retailers rendering service stage and not actually involving transactions doesn’t have to come under the GST tax model. So basically, there are two main online retailer types. The first one being the mediator performing its duty of connecting the buying customers to the product supplier. The second type is the ones managing the whole process of buyer-supplier connection which include the necessities like description, photos, pricing, refunds, etc., of the products. However, with the new GST model, it has detailed explanations and definitions of how the taxation would be imposed, therefore, so far, as per the situation and the scenario, the odds in favour of online retailers and their plead for full exemption from GST seems difficult to achieve.

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Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

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