Small businessmen selling goods on online platforms may soon be exempted from registration of GST. The central and state governments are of the view that such a move will expand the reach of small enterprises through e-commerce. A government official associated with the matter said that this step will bring a structural change in the country’s five-year-old indirect tax system.
At present, offline merchants need GST registration only if their annual sales exceed Rs 40 lakh. Whereas online merchants have to compulsorily register for GST, irrespective of their annual sales. If this proposal is approved, then both online and offline businessmen will become equal in this matter.
This rule is a hindrance in increasing business.
A government source told Live Mint, “Representatives of industry and business have approached the government to bring parity between online and offline sellers on the issue of GST registration. He says that the current rules are a hindrance in reaching the large customer base of small traders. Talks are going on between the central and state governments regarding this matter. The Law Committee of the GST Council will first examine this proposal. A decision will be taken only after that.”This move is also significant in the sense that a large part of the Indian economy is informal. Being online can be of great benefit. There are over 63 lakh unincorporated, non-farm MSMEs (Micro, Small and Medium Businesses) in India. They contribute one third to the total economy of the country. Of these, more than 23 lakh are traders and about 20 lakh are manufacturers.
small traders will benefit
According to MS Mani, Partner, Deloitte India, “If the government takes this step, it will greatly benefit and encourage micro, small and medium enterprises. Online and offline businessmen will become equal in this matter. With this, even those small businessmen who are not yet connected digitally will be inspired to do online business. Many businessmen shy away from selling their products online only because of the mandatory GST registration.