Since the mention that GST would be replacing certain taxes in Indian retail, online sellers, etailers and industry experts have been wondering how it will affect different players in the ecommerce market. Sellers believe it will bring the ecommerce industry relief. Marketplaces, on the other hand, have their doubts. The Internet and Mobile Association of India (IAMAI) feels that GST will force ecommerce companies to cut down on innovation. The very element that makes the industry grow.
Indian Online Seller (IOS) spoke with Mayank Goyal an online seller who specializes in the sale of baby products. He says, “As we all know, the government itself is not clear on GST and speculation is going on till now. We have to wait till the budget is announced so we have a clear idea about GST.”
Based on what he already knows about the tax, he says it is good for online sellers as it will bring uniformity. However, for sellers to reap the benefits of GST, they need to get ready for it.
To help online sellers like you prepare yourselves for the implementation of GST, IOS has put together a guide about the same. But, before we get down to the points of preparation, you need to understand GST at the grass-root level.
What is GST and why does it apply to you?
GST is a comprehensive tax. It is payable by taxpayers, these are, entities that are currently registered under Acts like –
- Service tax
- Central excise
- State Sales Tax / VAT (except exclusive liquor dealers if registered under VAT)
- Entry Tax
- Entertainment Tax (except levied by the local bodies)
- Luxury Tax
It will be implemented on the manufacture, sale and consumption of goods and services at the national level. No distinction will be made while levying taxes on goods and services. Now that you know who will be affected by GST, it’s time to prepare yourself for it.
Preparations for the implementation of GST
A. Enrol yourself under GST
Multi-category online seller Harshit Khandelwal mentions, “We registered our business under GST regime. Registration will confer many advantages to sellers like legal recognition, proper accounting of taxes paid on input and legally authorised to collect tax.”
If you fall under the above-mentioned Acts and are registered under Central, State, Union Territory Tax Acts and are underway in most states you must visit the GST system portal and enrol yourself. There is no deemed enrolment under GST. After enrolment you will secure a 15 digit provisional GST number.
For access to the GST system portal simply visit – www.cbec.gov.in. No fees or charges will be implemented on taxpayers enrolling under GST.
What documents are required for GST enrolment?
- Bank account number
- Provisional ID received from state or central authorities (used for VAT)
- Valid e-mail address and mobile number
- IFSC documents
- Password received from the state or central commercial tax authorities
- Proof of appointment and photograph of the authorized signatories
- Photograph of the promoters or partners of ‘karta’ in the case of HUF
- Opening page of the bank passbook or a statement which shows bank account number, including bank name, branch name, address, and few transaction details
- Proof of business (can be partnership deed, certificate of incorporation, registration certificate of the business entity) in PDF or JPEG format
For more details about the required documents click here!
B. Maintain accurate accounts
Mayank Goyal informs us that he is ready for GST based on the information he’s collected on it.
He says, “As of now we are prepared for GST as all our books are maintained properly till date. Tax was also deposits on time.”
To maintain proper accounts, Mayank says one needs to maintain designated teams. At his place of business, he has three designated teams to maintain proper accounts.
He says one needs to maintain,
“ 1. An accounting team – In the online retail business maintaining accounts must be done on priority. So provide your accounting team proper information. And, after GST it is very important to maintain the books to claim the correct tax credit.
2. A pricing team – As we know the taxes will be increased from the current situation. And therefore the settlements will also be affected. So prices have to be changed not to incur losses.
3. An invoicing team – which handles the invoices of orders from marketplaces needs to be well educated about the tax percentages.”
C. Redesign and update
Seller Harshit says he has updated the software he uses in online retail and has implemented a redesigned EPR framework in accordance with GST. The seller also says that he changed the design of the tax invoices as per GST guidelines.
He says, “According to Section 23A the key requirements are the following:
Name and address of suppliers who supplies goods and services
GSTIN of supplier
GST tax invoice number, etc”
D. Educate yourself and staff
According to Bizongo.in, the smart procurement solutions company, the best way to prepare for GST is by learning about it. The packaging experts are making attempts to educate online sellers about GST and its effects on sellers and their businesses.
Harshit also believes that this is a good move for online sellers and their staff.
He says, “As staff is a precious asset for any company. So, we appoint people having knowledge of GST and also conduct workshops and sessions for the old staff.”
E. Figure out the loopholes, if any
According to online seller Harshit, instead of holding back and being frightened by the consequences GST brings, sellers need to explore and see what it has to offer them and the wellbeing of their businesses.
He claims, “Instead of fearing the new tax structure, we are trying to make GST beneficial for our organisation and trying to figure out loopholes to take advantages of it.”
F. Marketplace implementations
IOS also spoke with AIOVA about the implementation of GST. The online seller group mentions that nothing’s really going to change for the online seller. The only main change is that online sellers from different states will have a level playing field.
For example, currently, if a seller in one state has to pay tax of 10% in another state a seller may have to pay a 15% tax. This gives the first state’s sellers an unfair pricing advantage. With GST in the picture, this won’t happen anymore, AIOVA informs us.
The only thing that needs to be taken care of is the TCS (tax collected at source) mechanism, the group says. This is something that online marketplaces need to look into.
Bizongo.in tells us they follow the marketplace model when assisting online sellers in selling to consumers. They state that it is very important for a marketplace to follow through with the GST implementations and make the necessary arrangements for the education of their online sellers about it.
Now that you how other online sellers feel about GST do you think it’s time to begin preparing? Or are you of the opinion that you will remain unaffected? Write to us your opinions about GST in ecommerce through the comments section below.