The Indian government has provided a temporary relief to key e-commerce players by temporarily delaying the implementation of several key GST bills. This should give e-commerce behemoths more time to settle their affairs and decide how to respond to the situation.
The government has delayed the implementation of provisions that required that these platforms deduct tax on payments made to their vendors from July 1. Also, small businesses using this platform to tout their wares will not have to register themselves immediately either.
E-commerce platforms had feared a loss of business after it was revealed that the new bill would require small retailers to register themselves with the government. After the delay, e-commerce platforms are still required to register themselves but their vendors can register later. The government will issue notification regarding a new date of implementations soon, as opposed to from July 1.
An Amazon spokesperson welcomed the move, stating that:
This ensures business continuity for the marketplace but most importantly benefits our sellers since they don’t have to deal with pressures of cash flow at a time when they are transitioning into a new tax regime.
Also, as per central GST and state GST, e-commerce entities were required to collect TDS or TCS for goods that were sourced under GST. However, this has now been deferred for later, providing further — albeit temporary — relief to sellers.
The finance ministry said:
Based on the feedback received from trade and industry, the government has decided to postpone the provision relating to TDS (Section 51) and TCS (Section 52) of the CGST/State GST Act 2017, with the objective of ensuring a smooth rollout of GST.
However, the tax will still be implemented but at a later date. Meanwhile, the All India Online Vendors Association has welcomed the move, but asked the government to implement the law as soon as possible so as to ensure a level playing field.
Considering that the GST portal has started registrations only since 25th of June, it is unlikely that all registrations will be concluded before July 1. As such, the move does make even more sense.