How will GST Affect the e-Commerce Industry in India?

Indian e-commerce market is growing leaps and bounds since the past few years and making a sizeable contribution to the Indian economy. However, now that Goods and Services Tax is finally implemented, how will it impact it? Let’s find out.

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1. Leveled Playing Field

In the previous taxation system, instead of GST, Value Added Tax or VAT was charged on the sale of goods. However, the rate of VAT varied from one state to another. So, a seller could be selling a particular phone at 14% rate while another at a 10% rate. This granted some sellers an unfair edge over other sellers from different states, especially on e-commerce portals. However, since GST will be same all across India, there will be uniformity in prices.

2. Faster Delivery

In the previous tax regime, a truck that’s transporting goods would often pass through a dozen check posts at borders. A lot of time was wasted in verification of documents in these instances. Since GST will eliminate the requirement of check-posts in several states, now sellers on e-commerce portals will be able to deliver the products to their customers faster.

3. Fewer Compliance Issues

Compliance and taxation were a mess before GST. On a single platform, there were sellers from different states, and there were all kinds of categories of goods.

GST has subsumed multiple taxes and made the system far more transparent through digital invoicing and cross-checking. Thus, e-commerce will be simpler now and it will be easy to check fraudulent and non-compliant sellers too.

Although GST has some complexities, overall, e-commerce is going to benefit from it in the long run- that’s for sure.