Are you planning to set up your own online business or intend to become an online seller at a reputable e-commerce website like Flipkart, Amazon, Paytm? But, the vague idea regarding the GST (Goods and Service Tax), implemented in the Indian economy, from 1st July 2017, has become a hindrance to your wishful thinking. It’s true that GST triggers to diminish the tax woes, but like all the other sectors, the e-commerce sector has been trying to adjust itself to the new tax structure. Whether GST would be advantageous or a barrier in the way to flourish a business setup, it has become a muddle for the online sellers. Let’s simplify the impact of this new tax reform on the online sellers.
Advantages of GST
- The GST law has stretched out the concept of input tax credit to cover the service or goods, used by a company for the business purpose. For the implementation of GST, online sellers can now enjoy the benefits of input credits.
- There is uniformity of tax all across the states.
- The main motto of online selling is to deliver the service or product to the customers, living any part of the country, or the world, from just your place. Earlier, the online sellers had to file separate paperwork for each state. But now, under the single tax structure, those days of hassle are long gone.
- There were multiple taxes on the same product, after GST, there is only one tax. This reduces the cost of the products.
- Small-scale online sellers or suppliers can manage to forge the most of the composition scheme to make their products or service less expensive.
Disadvantages of GST
- The e-commerce marketplace has to deduct 2% TCS based on the net profit, as the GST responsibility of the seller to the Government of India. The seller can claim this 2% amount only later.
- Since the implementation of GST, small to medium online sellers has witnessed a lot. Although it seems like this new tax reform seems to be more transparent, and paperless, it engages more compliance than before.
- E-commerce sellers cannot opt-in for Composition Scheme
- According to Flipkart, one of the major e-commerce sites in India, this new law of tax collection will no doubt be able to collect tax in a systematic way. But it may prove to be ruinous for the small to medium online sellers, who try to work on small margins to procure reasonable price rates to the customers.
- It primarily looks like the united form of taxation allows the online sellers to reach out to the consumers in multiple states. But, in case of that, the old tax structure was quite a similar to GST. For, it also allowed the online sellers to sell their goods or service across the country and even the world.
After discussing both the beneficial values and barriers of GST, it seems like it holds both the positive and negative compact on the online sellers, yet the positivity overpowers the hindrance.
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