GST & its impact to ecommerce Sellers.

If we notice today, eCommerce sellers in India bombarded with a lot of taxes, Tax Forms including VAT, CST, Excise, Service Tax, and TDS, with multiple taxes applicable on any given transaction. This has lead to a lot of complexities in logistics and reverse logistics. To add to it and make it more worse, statutory forms and e-way bills & manual way bill in states like UP / Jharkhand, Bihar, and NE states. For e.g, if we want to send a parcel to UP, the Consignee has to Visit Local Commercial Tax Office and get it sign and Stamped and send in original to Shipper for shipping a parcel, these procedures add complexity to interstate transactions.  Besides Sellers must also comply with local state tax registration requirements and declare their turnover to tax departments of multiple states. Under the upcoming GST law, India would be a unified common market with reduced compliance costs, and e-commerce business will notice major changes.

Upcoming Revolution for Ecommerce Under GST
As few seller’s say, several e-commerce transactions are currently undefined in tax laws and will have more explicit requirements for compliance. The model draft GST law are answering many longstanding questions and provides clarity on valuation, a definition of services (all intangibles) and goods, place of supply, and point of taxation. The model draft law also defines terms such as ‘electronic commerce,’ ‘aggregator,’ ‘electronic commerce operator,’ and so on. This clarity will change the way Tax Authorities consider eCommerce Shipments and thru this Interstate Trade would become more easier and faster.

New Challenges to Ecommerce Companies  : GST
As a mandate, Sellers or suppliers on e-commerce platforms are obligated to register for GST regardless of how much they sell. For Small Traders, this could be unfair since the same rule might not apply to offline sellers who sell very less amount below the threshold defined by GST Law.

Matching & Managing Return Orders
With the new law, for each transaction, e-commerce sellers will have to upload invoice details in their respective returns and the GST system will match them. In fact, any supply reported by the platform and not reported by the marketplace, if not reconciled, will be added to the liability of the seller, which will eventually penalize the seller.

Overall Impact Forecasted
There is a sudden surge for sellers to be more compliant for both sellers and e-commerce platforms, and for sure new rules definitely impact cash flows of small sellers due to TDS.

Very importantly for COD, mechanize needs a complete revamp in the case of direct shipping by sellers to the end customer, as new law does not define clearly on how COD has to be reconciled.

Online eCommerce Shipping Solutions companies would play an important role in understandings GST & Seller requirements to facilitate trade.

Revamping Traders System & Changes that would be needed
Majorly, Marketplaces will have to make many changes to their ERPs to handle the new requirements emerging due to GST.

Every order or invoice need to include a Harmonized System of Nomenclature (HSN) or Service Accounting Code (SAC) code. Besides, Place of Supply should be determined based on GSTIN for B2B transactions and delivery address for B2C sales. ERPs will need to be changed in multiple ways to deduct and account for TDS and reverse all charges appropriately when buyers return goods.

Additionally, Return filing will be a very big process, due to reporting invoice level sales, debit notes, and tracking mismatches, among other complexities.

However,  GST Act is a welcome move toward legal recognition of the e-commerce model & Logistics Companies in India, but without fail, further modifications will be required to avoid problems in execution. The faster these issues are settled/ clarified or addressed, the smoother & effective the GST rollout will be in the coming financial year.


  1. you have shared a great useful information for GST & its impact to ecommerce
    Sellers. keep updating these type of information.You have explained all the ideas correctly but have explained Upcoming Revolution for Ecommerce Under GST in details.


Post a Comment

Popular posts from this blog

How To Ship Important Documents Through Courier?

How to deal with ODA/OPA locations?

How to Create CSB-V Shipments?