GST Council okays mandatory registration waiver for small online retailers

The waiver, which is subject to certain conditions, will benefit about 120,000 small traders

In a move aimed at boosting the unorganised sector, the Goods and Services Tax ( GST) Council has agreed to waive mandatory registration for small online sellers. The changes in the law will come into force on January 1, 2023.

The move will benefit approximately 120,000 small traders, officials privy to the development said.

The Council also allowed composition dealers to make intrastate supplies via e-commerce operators, sources said.

Composition dealers are those with a turnover of up to Rs 1.5 crore. Thet are required to pay GST at flat rates with input tax credit (ITC).

At present, sellers supplying through e-commerce operators (ECOs) must compulsorily be registered even if their aggregate annual turnover is below the threshold limit of Rs 40 lakh or Rs 20 lakh. Sellers who operate offline are allowed exemption from registration for supply of goods and/or services up to Rs 40 Lakh or Rs 20 lakh. The threshold amounts are Rs 20 lakh and Rs 10 lakh in select states, including those in the north-east.

“Such a move will ensure parity between online and offline suppliers, and will give a major push to ease of doing business, especially for micro and small businesses, artisans and women entrepreneurs working from home,” one official said.

However, the waiver is subject to certain conditions.

First, such businesess would be required to declare their Permanent Account Numbers (PAN) and principal place of business. Second, for each PAN, such unregistered entities will be restricted to declare principal place of business in only one state. Such businesses will not be permitted to make interstate taxable supplies.

The move also addresses revenue concerns. The availability of information on supplies being made by unregistered person (based on their PAN) through various ECOs, along with other requisite checks as proposed, will only boost compliance further, leading to revenue augmentation, the official said.

These changes are in line with the recommendations of the GST law committee, which is learnt to have discussed the challenges faced by small online sellers before proposing multiple steps to the Council to weed out the disparity between online and offline sellers with certain riders.

Such onboarding of the smallest of MSMEs on to e-commerce platforms will yield rich dividends in terms of opening up job and business opportunities to SMEs in remote areas of the country. The unorganised sector, especially in rural and semi-rural parts of the country, will gain immensely from these proposed measures, the source asserted.

Notably, Amazon, Flipkart, and several other e-commerce businesses in India run outreach programmes to help entrepreneurs get on e-commerce platforms.