We’re all aware of a lot of chatter and some amount of confusion that surrounds the concept of GST , its benefits and its implementation for us.
GST or ‘Goods and Service Tax’ is a comprehensive Indirect tax, being implemented from the 1st of July 2017 in India, and is levied on the manufacture, sale, and consumption of goods and services. It is very similar to VAT, Service tax, etc., but now all these taxes are going to be unified in a single tax only – a.k.a. the GST Tax. In our current tax system – multiple taxes are levied at the point of origin – but GST is a destination- based tax. It aims to unify taxation throughout the country and to create One-Country-One-Tax system.
Now that we’ve understood the basic concept of GST – let’s take a look at how is GST going to affect us as sellers on the World Art Community platform which comes under the purview of e-commerce business.
Under GST, e-commerce has been identified as “Supply of goods and/or services including digital products over digital or electronic network.” An e-commerce operator is also defined to include every person who directly or indirectly owns, operates or manages an electronic platform that facilitates the supply of any goods and services. And that makes World Art Community an e-commerce company.
Introduction of GST requires World Art Community online seller community to become part of the GST regime.
Some of the important and necessary GST compliances are as follows :
GST Registration: All businesses doing online sales of goods as our seller partners on World Art Community – will be required to get registered under GST, irrespective of their turnover (timeline extended by government till further notice).
Composition Scheme: Most of our seller partners who are registered with us are small and medium businesses. The government has introduced composition scheme under GST law for them. This scheme is primarily aimed to reduce the burden of compliance for small and medium businesses. Under this scheme, businesses are required to file returns quarterly instead of monthly and pay taxes at nominal rates of up to 2%.
Tax Collection at Source by Online Marketplace Operator: Under the new tax regime, the marketplace operator ( in this case World Art Community ) is mandatorily required to deduct a percentage amount as the GST liability of the marketplace seller partner for each online product sale and deposit it with government. This mechanism is being termed as “Tax Collection at Source (TCS)” under the GST law. The tax amount will be deducted at source on each transaction at the rate of 1% of net value of taxable supplies. Eventually the marketplace seller partner will have to file their monthly return under GST, to claim the credit of TCS collected by the marketplace operator.
There could also be a situation wherein a product is returned due to a defect or replaced with an item of lesser or greater value. On which tax would have already have been deducted at source. In which case – both the e commerce company or marketplace operator and the marketplace seller partner would need to keep track of the purchase status and its value and amend records accordingly – while ensuring all compliances in their accounting systems with support of their financial advisors.
Next steps – Get your GST Enrolment done on Time ! To register for GST go here
You can also consult your Chartered Accountant or Financial Advisor for more details on the registration process. Once your GST enrolment process is complete – you are requested to update the information pertaining to your World Art Community store as soon as possible. You would be able to update your GST number in your profile section start 4th July. All you need to do is click on “update profile” link under “my profile” section. Alternately, you could simply click here and update.
We’re happy to share that the Government has in a welcome move, deferred enforcement of tax collection at source for Merchants selling goods on e-commerce platforms, under the new Goods & Services Tax (GST) regime that otherwise kicks in on July 1st 2017. More details here
This gives all of us more time to prepare for the system of tax collection at source – a fresh date for which will be communicated later by the Government.
To reiterate – as per the new GST laws, there will be a requirement of collecting up to 1% of tax from online shoppers by e-commerce companies and a 1% deduction of tax when central, state or local self-governments make payments to suppliers, which specified in central and state GST laws.
Here are the implications of this decision for e commerce firms and their seller partners :
- The government’s decision gives sellers on e-commerce platforms relief in terms of getting GST registrations. They need not get GST registration until the tax collected at source provision is enforced.
- Section 52 of the central and state GST Acts says e-commerce platforms have to collect up to 1% of the value of the supplies made to consumers at source and pay this to the government.
- The merchant, to whom the e-commerce firm needs to pass on the payment for goods and services sold, will get credit for the tax collected at source while paying GST.
Benefits for our seller partners
- Since most of us work as individuals and not as companies – the implications are more favourable for most of us.
- There is more time to take advice, to understand the new system and ease into its operations.
- More time to apply for the GSTIN
The New Tax Regime Awaits !
Although we are in the very initial stages of GST implementation and compliance – as sellers we do not have the luxury of time and it is advised that all processes be completed ahead of time to enable a smooth transition of your business to the GST regime.
Stay Informed. Seek Assistance
Adopt such platforms, technologies which will enable your business to be GST compliant. Check with your financial advisor to get all updates and access a pool of GST Calculators. Should you need any assistance, please write to us at firstname.lastname@example.org and we’d be more than happy to assist and help.
image courtesy: Times of India