E-commerce’s GST boost

With the government passing the much-awaited Goods and Services Tax (GST) bill, Indian manufacturers are surely rejoicing. After years of delays and deliberations at the Rajya Sabha, the passing of GST is considered the biggest tax reform in independent India. One of the benefiting sectors is the e-commerce sector which is expected to reach an unprecedented growth trajectory with this bill.

According to the US India Business Council, the clearance of the bill will be a ‘game changer’ and is likely to streamline domestic supply chains and remove the compliance burden of contradictory state tax regimes. R. Narayan, founder and CEO, Power2SME says, “The GST reform can clearly be termed as a landmark and India’s biggest tax reform since independence with the aim to streamline India’s fragmented tax system with a single levy. The passing of the GST bill is clearly good news for Indian businesses and will provide a huge fillip to the SME sector.”

This long due bill will help in achieving the vision – One Country, One law, states Siddharth Dalal, co-founder, BookMeIn and adds, “The bill brings along with it a lot of perks for start-ups — ease of doing business, efficient logistics, VAT exemption and more. For an e-commerce start-up like ours it will benefit in addressing the tax issues that have prevailed long before GST discussions were initiated. The fact that GST combines various taxes like service, excise, VAT, luxury and others into one makes the process of taxpaying easier, leaving start-ups with valuable time to ideate and utilise.”

With a goal to create one single market, the GST bill will boost economic growth with some optimistic estimates suggesting an added 2 per cent, states Narayan. “The GST regime will bring uniformity in the market creating a consolidated national-market-space. The distinction between goods and services will not apply, thereby ensuring ease in tax compliances by ensuring one unified tax levy. With the unified taxation system proposed, issues relating to regulatory uncertainty will be resolved and e-commerce shipment costs will reduce resulting in business growth for the organisations that are start-up driven. The start-ups and SMEs have more reason to rejoice, as this GST structure will provide higher exemptions to new business since businesses with turnover between Rs 10 and 50 lakh will be taxed at lower rates.”

Convenience, clarity and opportunity are what GST will bring for young Indian entrepreneurs, shares Deep Malhotra, co-founder of BECKFriends.com. “Now is the time to build global businesses based out of India by solving need gaps of users that can be converted into billion dollar businesses. GST will help the start-up community and thus help in strengthening the future of the country. Especially the logistics sector will benefit from this move, as it was in dire need of a revamp. With technological advancement, this sector will gain the most with the simplicity in tax structure that GST offers. The clarity in the tax structure will definitely boost trade for the country too.”

Deep also points out that the bill will cut bureaucracy and give easy access for the sellers all over the country. “It will be a win-win situation for all the stakeholders of the Indian economy — lakhs of producers and sellers will have easy access to an all-India market, consumers across the country will have access to quality products at affordable rates and there will be the development of a seamless national supply chain as well as creation of millions of formal jobs,” he says.

Looking at the users’ point of view, Kulpreet Kaur, co-founder, Shop Pirate Coupons avers, “For the e-commerce sector, there are lots of opportunities as it will simplify the state to state taxing system that used to affect the end users, who used to end up paying more for products bought online. But now there will be transparency in the costs. The only issue will be the increase in the documentation work and administration costs.”

India is full of potential for e-commerce players and obviously these issues cannot continue forever so a tax reform like GST is the only solution which will replace the current indirect tax regime, points out Jayant Mehrotra, co-founder at My Trade Box, “The current tax regime is complex and thus aggravates the entire cost structure. Major players are flooded with funds and with deep pockets. They have to set up their warehouses and get themselves registered in each state separately. Interstate movement is a nightmare that includes statutary forms, waybills, road permits etc and there are numerous rules in different states to register the e-commerce company. Also, the absence of policies on discount coupons, cash on delivery transactions, e-wallets, door shipments, has led players to adopt diverse practices. With the implementation of GST, we could get clear guidelines on taxation and on documentation management. The proposed bill also provides for tax deduction at the source (TDS) for online transactions, bringing e-commerce under the GST fold.”