E-commerce & GST
Given the importance of e-commerce in the nation’s economy, the GST law has carved out a specific chapter to regulate the manner in which transactions are conducted on e-commerce platforms. While the latest version of the law has done away with the differentiation between aggregators and e-commerce platforms, it has brought in a new law that allows the government to specify the sectors where the owner / operator of the platform would be required to pay GST on behalf of the actual service provider (e.g. Uber would pay service tax as an aggregator on behalf of the axis driver). E-commerce platforms are also required to deduct tax at 2% on the value of supplies made through their platform. Thus, platforms like Flipkart and Amazon would be required to deduct tax and remit it to the government.
These platforms are vehemently opposing the idea of such tax deduction; it needs to be seen whether their pleas will be heard by the government. There are businesses that are currently enjoying exemptions under service tax; it needs to be seen whether these exemptions would continue. Service rendered to SEZ units are currently exempt from service tax on submission of certain documents; again, it needs to be seen whether this benefit will continue.
The revised GST law has also incorporated the existing online information access and database retrieval law and thus, non-resident service providers supplying to end consumers in India will need to discharge GST in India. Lastly, there will be clarity on the treatment of software as it would now be eligible under a single law. In a nutshell, GST has several benefits to offer to businesses engaged in IT and consultancy services. The IT industry for one is going through a patch of uncertainty; we believe GST will bring about a surge in positive outlooks. We hope you enjoyed reading our post. If you have any questions, feel free to write to us on firstname.lastname@example.org.