Exemption from GST Registration for Online Sellers with Low Turnover to Promote E-Commerce

We must state that this is the Era of eCommerce enterprises. As this grew, it carved out its own niche in the market. If it continues to develop at this rate, it will rule all businesses.  

Since the government mandated that to GST register for eCommerce sellers, there are various GST registration exemption, such as the yearly turnover of the business to appreciate eCommerce businesses.  

Read the blog to learn more about the GST registration exemption.

What is GST Registration for E-commerce?

According to the GST Act of 2017, It is the procedure for registering a seller or owner of an e-commerce business under the GST. As per GST law, the activities of selling and buying goods and services are taxable, and these services are subject to the application of GST.

Regardless of the value of the supply, all members who conduct business through e-commerce websites must obtain GST registration. However, whoever owns the websites and the commodities delivered to the firm should have GST registration.

Despite GST, there is another concept called TCS (Tax Collection at Source). According to the TCS concept, the e-commerce operator must collect TCS at 1% of the net taxable income and deposit that money with the government.

There are numerous new E-commerce companies with very low turnover rates as the industry grows along with the major E-commerce operators. At present, government mandates all online retailers, irrespective of their annual sales volume, to register for GST. While those who operate offline stores are exempt from GST registration until their annual turnover for goods and services is at least Rs. 40 Lack and Rs. 20 Lack, respectively.

It could lead to a bias emerging between online and offline markets and could deter a small online vendor from operating their business. Therefore to promote small online vendors, the Goods and Services Tax (GST) Council decided to GST registration exemption for small online sellers. The new legislation will take effect on January 1st, 2023.

This encourages small sellers like housewives, crafters, and homemakers to operate their companies online. 

The GST has caused a few problems for e-commerce operators

• Filing a GST registration

There are requirements for GST registration according to the law. That person cannot register for GST if they do not meet that prerequisite. There is no set turnover limit for e-commerce operators, thus if one exists, anybody who holds an e-commerce operator registration must also be registered for the Goods and Services Tax (GST).

• Composition Scheme 

Composition schemes offer the benefit of requiring a 2% tax payment and the completion of a quarterly GST return. This is an option for small and medium-sized taxpayers. This helps them to reduce compliance costs. However, E-commerce operators are not eligible for this scheme. Even though small online vendors cannot benefit from this.

• Higher compliance cost 

In GST there is one concept called TCS. According to this concept, the eCommerce operator needs to collect the TCS amount and deposit this amount to the government which increases the compliance cost for eCommerce. On every transaction, they have to collect the TCS amount which increases the compliance burden. 

• GST on Stock Transfer 

The business will eventually need to transfer the stock. An e-commerce operator transfers the stock that is subject to tax from the vendor to the warehouse and from the warehouse to the shop. This type of transfer is considered a supply under the GST. Taxes are due on every transfer. The credit is available for the amount of GST paid by the online vendor.

• While offering a discount, a valuation issue arises 

The GST will apply to the transaction value. If the e-commerce Operator offers a discount to the customer, how will that discount be taken into account when determining whether to reduce it from the transaction value of the supply? 

There are two different forms of discounts, as per GST law.

1. Pre supply Discount

Prior to the delivery, the person offers a discount, which is acceptable in the regular course of business.

1. Post supply Discount 

The discounts that are granted following the provision of products and services. Because it is offered after supply, this kind of discount is accounted for in the transaction value at the time of supply. 

After a transaction, every eCommerce site needs to produce an invoice.
If you are an online seller or want to start an online eCommerce store with WooCommerce and want to automate your GST invoice generation WooGST plugin is the best option available to you. With the WooGST plugin, get your invoice ready. The WooGST plugin provides GST settings for your WooCommerce store. It automatically generates the customized invoice with the GSTIN number.