May 27, 2019 0

Ways in which GST has affected E-commerce

The Good and Services Tax (GST) is one of the crucial initiatives to liberate the Indian economy from complications. It follows the ideology of introducing one single tax system to make the system more easily manageable. The need for sellers to register with multiple tax platforms and file multiple tax returns has also been eliminated after the launch of GST.

Among the various sectors, the E-commerce sector witnessed tremendous changes. Mentioned below are a few points to discuss the impact of the GST Act on any online seller’s business:


Under the umbrella of GST, the reach of e-commerce sellers has increased significantly. Previously, small case e-commerce sellers were not capable to compete with the large scale businesses. They were just limited to an area or a state because operating outside the boundary of one’s state calls for the imposition of tax. Previously, any good sold outside the state was subject to taxation due to trading across multiple states. With the unifying of the taxation process, E-sellers can easily sell goods across various states without worrying about multiple taxes.

Compulsory Registration

Any turnover threshold of Rs 20 lakh should be registered under GST. For the north-eastern states, the turnover threshold has been relaxed to Rs 10 lakh by the government. However, registration is mandatory for e-commerce sellers whether they fall below the turnover slab of Rs 20 lakh or not. This compulsory registration helps to bring in more online businesses under the taxation process.

Cannot opt for the Composition Scheme

The government has barred E-commerce sellers from opting for the Composition Scheme. The scheme allows any business to file quarterly returns instead of monthly and pay tax at a low rate of 2% that has a turnover of under Rs 75 lakh. It may seem to be disadvantageous for the e-commerce sellers but the effort required to file the Composition Scheme is relatively higher. Hence, the burden of documentation gets reduced on the sellers.


In India, where consumers prefer ‘cash on delivery’, sales witness return of orders amounting nearly to 18%. Almost all sellers take around 7-10 days to process the refund. For cancelled orders where taxes have been filed, generating refunds can very confusing and complicated.

Every businessman should be well aware of the impact of GST. Since its inception, there have been significant developments in the Indian economy. In case you are unaware of the guidelines of GST, you can look up the guidelines of GST online.