Impact of Goods and Services Tax (GST): far-reaching changes for online businesses:- www.deekpay.com

The introduction of GST is undoubtedly the boldest and largest tax reform since the opening of our economy. It aims to provide a uniform tax strategy for India. For online businesses, especially in the e-commerce space, the implementation of GST is a major boon.GST helps in rationalising the seamless integration of goods and services across the country and provides clarity to online businesses on the applicability of direct taxes. This is the first step towards creating a clear law for e-commerce, thereby creating a stable environment for business growth and development.

Here are the key impacts of GST on online businesses and recommendations:

**Impact of GST on online businesses**

This reform not only reshapes the existing model of indirect taxation, but also improves tax compliance.

**Establishment facilitation**

GST has made it easier for online businesses to get started by achieving uniformity through a centralised registration system. This centralised system replaces the old and rigid VAT registration process issued by the sales tax department.

**Higher tax allowance**

Previously, businesses with a turnover of more than Rs 5 lakh were required to register for VAT. The reforms have raised this threshold to Rs 1 lakh, bringing relief to emerging businesses.

**Tax simplification**

It aims to reduce barriers in the dual tax system and simplifies the tax process by consolidating all taxes into a unified GST.

**Reduced logistics costs**

The reforms have eliminated the border tax levied on the movement of goods between states, and hence the cost of the logistics chain will be reduced. Seamless interstate movement of goods will further stimulate demand for logistics services. Cost competitiveness will also be reduced as participants are directly integrated into the single tax system.

**Compliance of e-commerce under GST**

GST provides absolute clarity to e-commerce companies on the application of tax in their transactions.

**Establishment of Special Purpose Vehicles (SPVs)**

The success of GST is highly dependent on a robust IT system. As a result, GSTN, a Special Purpose Vehicle (SPV), was established to provide a unified portal for registration, filing and electronic payments.

**Tax collection at source**

GST provides that any payment made to a supplier is taxable and collected at source. In addition, if an e-commerce company decides to sell a product at a discounted price, it has to pay tax on the price at which it purchased the goods from the supplier.

**Definition of electronic commerce**

E-commerce is clearly defined under the GST Act.

"E-commerce" shall mean the supply or receipt of goods or services, or the transmission of funds or data, over an electronic network, principally the Internet, using any Internet-dependent application (such as e-mail, instant messaging, shopping carts, Web services, Universal Description, Discovery and Integration (UDDI), File Transfer Protocol (FTP) and Electronic Data Interchange (EDI)), regardless of whether payment is made online or not, and whether the final delivery of goods or services is made by the operator. the supply or receipt of services, or the transfer of funds or the transmission of data, whether or not the payment is made online and whether or not the final delivery of the goods or services is made by the Operator.

With GST bringing significant changes to the tax system, we are in for interesting times. Stay tuned to the PayUmoney Knowledge Platform for the latest updates and insights.

Source: Ministry of Finance, Government of India