Rahul Exemption for E-Commerce Suppliers of Goods from 1 Oct 2023

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The Central Board of Indirect Taxes and Customs (CBIC) has issued a notification dated 30 September 2023, exempting suppliers of goods through e-commerce platforms from obtaining GST registration, subject to certain conditions. This exemption will be applicable from 1 October 2023 and will benefit small businesses, artisans, weavers, handicraft makers, artists, freelancers and home makers who can access markets through e-commerce without registering under GST.

Conditions for GST Exemption

The notification specifies the following conditions for availing GST exemption for e-commerce suppliers of goods:

The supplier should not make any interstate supply of goods. This means that the supplier and the buyer should be located in the same state or union territory.
The supplier should have a Permanent Account Number (PAN) and an enrollment number on the common portal. Enrollment number can be obtained by filling a simple online form on the GST portal.
The supplier should not be liable to be registered under GST under any other provision of the GST Act. This means that the total turnover of the supplier should not exceed Rs. 20 lakhs (Rs. 10 lakhs in special category states) in a financial year.
The supplier should not engage in supply of any service through e-commerce platform. This exemption is applicable only to suppliers of goods and not services.
The supplier should not be engaged in the supply of any notified goods which require compulsory registration under GST. These include ice cream, pan masala, tobacco and tobacco products.
Benefits of GST Exemption

GST exemption for e-commerce suppliers of goods will have the following benefits:

It will reduce the compliance burden and cost for small and marginal suppliers who sell their products through e-commerce platforms.
This will encourage more suppliers to join the e-commerce ecosystem and expand their market reach and customer base.
It will boost the growth of e-commerce sector and boost digital economy in India.
This will increase the competitiveness of Indian products in the global market and increase exports.
Challenges of GST Exemption

The GST exemption for e-commerce suppliers of goods will also pose some challenges:

It will create a disparity between online and offline suppliers of goods, as offline suppliers will still have to register under GST and pay taxes.
It will increase the risk of tax evasion and leakage, as some unscrupulous suppliers may misuse the exemption and under-report their turnover or supply goods across States without paying GST.
It will increase the responsibility and liability of e-commerce operators, as they will have to collect and deposit GST on behalf of the exempted suppliers and furnish monthly statements with details of such supplies.
This will create operational difficulties and confusion for both suppliers and buyers, as they will have to deal with different tax regimes and rates depending on the mode and location of supply.
GST exemption for e-commerce suppliers of goods from 1st October 2023 is a welcome move by the government to support small businesses and promote digital commerce in India. However, it also comes with certain challenges and risks that need to be addressed by both the government and the stakeholders. The success of this exemption will depend on how effectively it is implemented and monitored by the authorities and how responsibly it is used by suppliers and operators.

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