Ease of Doing Business for MSMEs: The GST Council has already exempted small businesses that make intra-state supplies through e-commerce platforms from the ambit of GST registration, provided their turnover is less than Rs 40 lakh for products, and 20 lakhs for services. This rule will be applicable from October 1 of this year.
Ease of Doing Business for MSMEs: Think Tank Global Trade Research Initiative (GTRI) suggested, on Monday, that small suppliers sending their products across states through e-commerce should be exempted from Goods and Services Tax (GST) registration if their turnover does not exceed the threshold, as reported by the Press Trust of India (PTI).
The GST Council has already exempted small businesses that make intra-state supplies through e-commerce platforms from the ambit of GST registration, provided their turnover is less than Rs 40 lakh for products, and 20 lakhs for services. This rule will be applicable from October 1 of this year.
GTRI has proposed that these rules should be extended to cover inter-state supplies as well for micro and small enterprises selling through e-commerce platforms.
GTRI co-founder Ajay Srivastava said that in the current situation, a small village artisan with an annual turnover of less than Rs 10,000 selling metal-ware craft through her website must enrol for GST pay tax and file regular returns despite their low turnover. However, if the artisan restricts business to a particular state, she/he does not need to pay GST but might lose out on potential revenue.
“India is poised for a big jump in e-Commerce exports in the next few years. Enabling easier interstate sales will be the first step in that direction… The GST provision should be the same for within and across states’ supplies,” Srivastava said.
Furthermore, according to the statement, GTRI has also suggested a common GST registration for enterprises operating in different states. In the present scenario, if a firm is present in 10 states, it is required to have a different registration in all 10 states, making the compliance process more complicated.
“Since all supplies are captured online by GSTN, the GSTN can extract precise state-wise records from the PIN Code of the place of supply without seeking information from the firms,” Srivastava said.
Moreover, GTRI suggested that State GST credit be transferable among states. For example, if an enterprise has surplus SGST credit in Uttar Pradesh, it can not use that surplus in any other state but Uttar Pradesh only. This restriction leads to credit blockage and affects the working capital of the MSMEs.
“Restricting utilisation results in capital blockage… Allowing interstate use of SGST credit will not dilute the tax due to a state,” Srivastava said. These changes would provide greater flexibility and efficiency for businesses operating in multiple states, encouraging inter-state trade and investment and promoting economic growth, he added.
