Impact of Goods and Service Tax (GST ) on E-Commerce

Goods and Service Tax (GST) is a reality after more than 10 years of discussions at different forums. It is likely to be rolled out on 1st July, 2017. Whole country will be treated as one seam less market under GST regime . Government- center and states including Union Territories , industry , transportation companies , tax authorities , banks and common public including students , the future corporate budding managers are supposed to fully understand different aspects of GST .

GST will have positive impact on industrial and economic growth of India. The exporters and e- commerce companies will also be benefitted after implementation of GST due to following reasons :

• Removal of cascading effect of taxation and availability of seamless flow of tax credit across the value chain.
• Provision of input tax credit in case of taxes paid of raw material, input items and services utilized.
• Central Excise , Service Tax , VAT/Sales Tax , Entertainment TAX , Purchase Tax , Octroi and Entry Tax will be subsumed in GST .
• GST may benefit Exporters since all taxes paid will be refunded whereas in prevailing practice Duty drawback against VAT paid for export items is not refunded .
• Tax net will also increase because of credit on GST to be given to all those businesses which will be registered under GST Laws.

In order to understand implication of GST on e-commerce, it is important to have clarity on all aspects of e-commerce and GST.

E-Commerce

E-Commerce is defined as supply or receipt of goods and/or services or transmitting funds or data , over an electronic network , primarily the internet , by using any of the applications that rely on internet irrespective of payment being made on line or off line and whether or not the ultimate delivery of the goods and/or services is done by the operator.

E-Commerce operator

Every person who directly or indirectly , owns , operates or manages an electronic platform which is engaged in facilitating the supply of any goods and/or services is called e-commerce operator. A person supplying goods /services on his own account will not be considered as an operator. Amazon, Snapdeal and Flipkart are e- commerce operators

Aggregator

Aggregator is a person who owns and manages an electronic platform, and by means of the application and communication device, enables a potential customer to connect with persons providing service of a particular kind under the brand name or trade name of the aggregator . Ola and Uber Cabs are aggregators .

Features of Market Place Model

Some of the features of marketplace model are :
• Marketplace enables third-party sellers to register and sell on line on their platform.
• Marketplace charges a subscription fees /commission on sale value of listed sellers.
• Third – party sellers under this model gain access to a larger customer base, registered with marketplace.
• Customer gains access to multiple sellers and competitive prices for desired products.
• Items purchased on such market place are either shipped by Merchant / third party seller directly or through the fulfillment center managed by Marketplace operator.

Implications of GST on E-Commerce

It is important for e-commerce business in India to become GST Compliant at the earliest and prepare to adopt GST regulations without loosing time.