The Global Trade Research Initiative (GTRI), a prominent think tank, has called on the GST Council to extend the exemption for small suppliers on e-commerce platforms, allowing them to undertake inter-state supplies without GST registration. GTRI proposes that small businesses engaging in inter-state supplies through e-commerce platforms should be exempted from GST registration if their turnover does not exceed the prescribed threshold.
In a recent decision, the GST Council had exempted small businesses conducting intra-state supplies via e-commerce platforms from mandatory GST registration. This exemption applies to businesses with an annual turnover below Rs 40 lakh for goods and Rs 20 lakh for services, and it is scheduled to come into effect from October 1.
With the 50th GST Council meeting approaching, GTRI has submitted its recommendation to extend this exemption to cover inter-state supplies made by micro and small businesses through e-commerce platforms. By doing so, GTRI aims to facilitate the growth and ease the compliance burden for these small suppliers.
The proposed extension of the exemption aligns with the government’s efforts to support small businesses and foster digital commerce. E-commerce platforms have emerged as a crucial channel for small suppliers to reach a wider consumer base and expand their business beyond geographical boundaries. However, the current GST registration requirements for inter-state supplies can pose a significant challenge for these micro and small businesses.
By exempting small suppliers from GST registration for inter-state supplies, GTRI envisions a more conducive environment for their participation in cross-border e-commerce. This exemption would ensure that small suppliers can continue their operations seamlessly without facing additional compliance complexities. Moreover, it would encourage more entrepreneurs to explore inter-state trade opportunities, thus contributing to the overall growth of the digital economy.
The proposed exemption is consistent with the government’s emphasis on easing regulatory burdens and promoting ease of doing business. By aligning the registration rules for intra-state and inter-state supplies, the GST Council can provide a level playing field for all small suppliers on e-commerce platforms. This approach would simplify the compliance process, reduce administrative overhead, and foster a business-friendly ecosystem.
While the exemption may lead to a temporary reduction in tax revenues, it can be seen as a long-term investment in the growth and sustainability of small businesses. By allowing small suppliers to flourish and expand their customer base, the government can foster entrepreneurship and create more employment opportunities.
It is important to note that the GTRI’s recommendation comes at a time when the digital economy is experiencing rapid growth and evolving consumer behavior. E-commerce platforms have become an integral part of our daily lives, providing convenience and access to a wide range of products and services. Enabling small suppliers to participate in inter-state trade through these platforms without the burden of GST registration would not only support their growth but also enhance competition and consumer choice.
The GTRI’s proposal to extend the exemption for small suppliers on e-commerce platforms, allowing them to undertake inter-state supplies without GST registration, is a progressive step towards nurturing the digital economy. By embracing this recommendation, the GST Council can promote inclusive growth, simplify compliance procedures, and empower micro and small businesses to thrive in the dynamic world of e-commerce.