Goods and Services Tax (GST) is supposed run on a ‘one nation, one tax’ concept which paved way for some respite for e-Commerce players. Currently, multiple taxes and cascading effect of taxes is causing a huge dent on profit margins.
While the draft GST law eases out situation to some extent, it leaves some questions unanswered:
1. Sales return (Goods returned by customer)
As per the industry standards, 30%-40% of the goods sold are returned. Draft GST Law fails to discuss any specific provision in case of adjustment of refund/ tax paid on sale on return of such goods.
2. Registration in every state?
Section 19 of Model GST Law requires to “apply for registration in every such State in which he is so liable”. In an e-Commerce set up, supply is made to almost every state. Therefore, ambiguity with regard to obtaining registration in all such states looms over e-Commerce players.
In case this happens, it would mean humongous compliance and associated credit issues.
3. Tax Collection at Source
To catch hold of unregistered person tagged along giant e-Commerce player, the government has introduced concept of tax collection at source under GST also.
However, there is no such levy in case of e-Commerce players wokring under buy and sell model. Thus, players plying market place model as crying foul and discrimination.
4. Tax on freebies
As per model GST Law, any supply without consideration will also be under GST net and could be subject to tax. Industry is lobbying for no separate GST on freebies.
5. Maintenance of Records
GST law says that in case supply is made from more than one location, accounts relating to such place have to be separately maintained. Considering, e-Commerce players have PAN India presence with centralized billing/ accounting/ contracts, maintenance of separate records is a hefty task.