Ease of doing business for MSMEs: E-commerce sellers supplying goods with a turnover of up to Rs 40 lakh and services with a turnover of up to Rs 20 lakh but unregistered under the Central Goods and Services Tax (CGST) Act will be allowed to make intra-state supply with effect from October 1, 2023, the GST Council noted on Saturday. The council, under the chairmanship of finance minister Nirmala Sitharaman, in the media briefing on the outcomes of its 48^th meeting, “approved the amendments in the GST Act and GST Rules, along with the issuance of relevant notifications, to enable the same.”

“Further, considering the time required for the development of the requisite functionality on the portal as well as for providing sufficient time for preparedness by the e-commerce operators (ECOs), the council has recommended that the scheme may be implemented w.e.f. 01.10.2023,” the council said. 

To facilitate e-commerce for micro enterprises, the GST Council in its 47th meeting in June this year had granted in-principle approval for allowing unregistered suppliers and composition taxpayers to make the intra-state supply of goods through ECOs such as Amazon, Flipkart etc., subject to certain conditions. 

These conditions included, first, the aggregate turnover on an all-India basis should not exceed the turnover specified under sub-section (1) of section 22 of the CGST Act and notifications issued there under. Second, the person is not making any inter-state taxable supply. Unlike online sellers, offline sellers are exempted from registration. 

“This decision will empower small traders who are below the GST threshold limit to expand their business through e-commerce. There are more than 8 crore small traders in the country, but a large number of traders are conducting business activities without GST registration since their annual sale is below the GST threshold limit. Such traders will now be able to trade on e-commerce,” said traders’ body CAIT’s National President B C Bhartia and Secretary General Mr Praveen Khandelwal in a statement. 

The GST registration waiver from October next year will also apply to e-commerce sellers with turnover up to Rs 1.5 crore registered under the GST composition scheme. The scheme aims at reducing the compliance cost for small taxpayers with lower tax rates of 2 per cent of turnover for manufacturers, 1 per cent for traders, and 5 per cent for restaurant businesses. 

Importantly, a Parliamentary committee report in June this year on the promotion and regulation of e-commerce in India had suggested extending the GST Composition scheme to online sellers in order to incentivise MSMEs toward e-commerce adoption.