India’s largest online retailers are lobbying hard against requirement to register in each state under the proposed goods and services tax (GST) regime, which may not allow them to accept products from small dealers with annual turnover of Rs 20 lakh as they have been kept outside GST.
If an ecommerce firm still sells products of an unregistered dealer, it will have to pay full tax without the benefit of input tax credit. Meanwhile, India’s ecommerce giants such as Amazon, Flipkart, Myntra and ShopClues have conveyed to the finance ministry and GST Council that they will have a tough time with compliances if they have to register in individual states. The GST regime will also remove any incentive for an online portal to sell the product of an unregistered dealer, said a state VAT official. Revenue secretary Hasmukh Adhia, too, has called out trades and businesses to deal with those dealers with a GST identification number (GSTIN). If a small dealer wants to sell his products on an ecommerce portal, he will have to take a voluntary registration, the official said.
These roadblocks will keep small traders away from digital marketplace, said Sanjay Sethi, CEO of ShopClues. “We are going to keep out all those small dealers who don’t have a GSTIN, while at ShopClues, we want to provide digital marketplace access to people like weavers, potters, artisans and those engaged with the cottage industry,” he said.