E-commerce retailers are trying their best to finish their pending stock before July 1st, 2017. They are luring in customers by giving discount offers ranging from 25 per cent to 90 per cent. But that’s going to change after July 1 when the GST comes into force. Most of your online shopping will get expensive after the GST. Here’s how:
Government Defers TDS and TCS for e-commerce Sector under GST
E-commerce companies will no longer need to take 1 percent TCS while paying the supplier. Due to TCS, there is no problem in the initial time of GST, so the government has touted TCS. According to the Central GST Act, Notified Antitis is to collect TDS. Goods worth more than 2.5 lakhs and service supplier will get 1% TDS.
Tax collected at source
Currently, e-commerce websites do not collect tax in any form. Under the GST, they will collect tax at a fixed rate of 1 per cent while paying to the sellers listed on their websites. This is likely to impact prices and make your online shopping more expensive. Though, the move has been deferred, it is likely to come in force at a later date. Businesses with less turnover of Rs.20 lakhs do not have to register in GST. Now a trader or businessman with less than 20 lakh turnover that sells goods and services on e-commerce portal also does not need registration in GST.
This Decision taken after talks with industry
According to the finance ministry, after the trade and industry feedback, the government has postponed the TDS (Section 51) and TCS (Section 52) in the CGST and State GST Act 2017 and the current GST in force from July 1 to July 1. This has been done so that e-commerce companies and small businessmen can prepare themselves for GST.
Shopping from global players
Returns and cancellations will get difficult
Returns and cancellations are going to face challenges. E-commerce companies have a return or cancellation rate of nearly 18%. While collecting tax at source, e-commerce companies will have to bear the tax amount on their own and only later get refund from the government in case of returns and cancellations. The companies will face a major cash-flow disadvantage due to returns and cancellations. Recommended Articles
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