Small businesses using e-commerce platforms to sell their products will not be required for compulsory registration as Finance Ministry has notified changes in GST (Goods &Services Tax) law. However, this exemption will be subject to certain conditions.

The norm will come into effect from October 1.

Though, the threshold of annual turnover for mandatory registration under GST is ₹40 lakh and ₹20 lakh for goods and services, respectively (₹20 lakh and ₹10 lakh in selected States). However, there are compulsory registration requirements in some instances, which means a seller who wishes to sell products in e-commerce is invariably required to obtain GST number No. Any seller who does not have a GST number is not allowed to sell products on any e-commerce portal. Now, this provision will change.

A notification issued by the Central Board of Indirect Taxes and Customs (CBIC) and dated July 31 says:” the Central Government, on the recommendations of the GST Council, specifies the persons making supplies of goods through an electronic commerce operator who is required to collect tax at source and having an aggregate turnover in the preceding financial year and in the current financial year not exceeding the amount of aggregate turnover above which a supplier is liable to be registered in the State or Union territory as the category of persons exempted from obtaining registration.”   

Such a business entity will have to fulfil eight conditions for the exemption. First of all, it will not make any inter-State supply of goods. Second, it will supply goods through electronic commerce operators in more than one State or Union territory. Third, it shall be required to have a Permanent Account Number. Fourth, such entity shall, before making any supply of goods through electronic commerce operator, declare on the common portal their PAN, address of their place of business and the State or Union territory in which such persons seek to make such supply.

Fifth, such an entity needs to have been granted an enrolment number on the common portal on successful validation of the PAN. Sixth, it shall not be granted more than one enrolment number in a State or Union territory. Seventh, only a supply of goods shall be made by such entity through an electronic commerce operator if such persons have been granted an enrolment number on the common portal. And eighth, the enrolment number on the common portal will cease to exist from the date of registration by such an entity.

This has been a long pending demand from small businesses as trade bodies earlier argued that such a provision is barring not only lakhs of traders across the country from using e-commerce to sell their products but even prohibits large numbers of small businesses of artisans, craftsmen, household and cottage industry, women entrepreneurs who are conducting businesses from their home to supplement the income of the family and people of other similar sections of the society. It was also said that such a provision is badly hitting not only the domestic market but even exports are being suffered to a greater extent.

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