In a move that will benefit individuals in the disorganized sector, the GST council decided on Wednesday to waive mandatory registration for small entities selling their products online. The exemption is for those with an annual turnover of up to Rs 20 lakh and those who do not make interstate taxable supplies. The changes will take effect on January 1, 2023.
The two-day 47th meeting of the GST Council, chaired by Finance Minister Nirmala Sitharaman, took place in Chandigarh on Tuesday and Wednesday, and the Council’s final decision was announced on Wednesday.
The Council has provided for the “waiver from the requirement of compulsory registration under Section 24(ix) of the CGST Act for persons supplying goods through ECOs, under certain conditions, such as – a) not exceeding the total turnover on an India-wide basis exceeds the turnover specified in subsection (1) of Section 22 of the CGST Act and notices issued pursuant thereto; b) the person does not make an interstate taxable supply,” an official statement said.
Meesho founder and CEO Vidit Aatrey said this move brings much-needed parity between offline and online businesses. With an estimated five crore MSMEs currently unable to sell online due to mandatory GST requirements, this groundbreaking measure could power millions of small units, including artisans, boutiques and mom-and-pop stores.
“While MSMEs will benefit from a much larger addressable market, greater efficiency and easier access to capital, the move will boost the Indian economy and release massive tax revenues for state governments,” Aatrey added.
Providing great relief to MSMEs, the Council has also extended the threshold exemption of Rs 40 lakh for intra-state sales and the threshold of Rs 1.5 crore under the compounding scheme to online merchants. This is a game-changer for the SME sector that would now have access to the e-commerce platform and this will allow more merchants to make the switch from online to offline.
The Council on Wednesday also allowed composite taxpayers to make intrastate offers through e-commerce operators (ECOs). “The details of the scheme will be worked out by the Council’s Legal Committee. The scheme would be provisionally implemented from January 1, 2023, subject to portal readiness and by ECOs,” the statement added.
Composition dealers are those with sales up to Rs 1.5 crore. They are required to pay GST at flat rates with pre-tax credit (ITC).
Abhishek Jain, partner (indirect taxation) at KPMG in India, said: “In line with the government’s agenda to facilitate e-commerce in India, several compliance bottlenecks for the e-commerce sector have been removed, while suppliers have the option of e-commerce. commerce platforms to operate on a composition scheme. This change will specifically help with the compliance burden of such suppliers and will invite more players in the market to run their businesses through e-commerce websites.”
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