The impact of Goods and Service Tax has been widespread on the ECommerce industry. ECommerce Suppliers and operators are at a disadvantage with mandatory registration, increased compliance and tax collection at Source. GST has also brought positive news for the E-Commerce shoppers.
Impact of GST on ECommerce Consumers:
Before GST implementation, there were many documents required during inter-state transfer. Examination of the statutory forms & papers and verification of documents often took up to hours. Exporters had to file as many as ten documents for one product. Logistics for commercial activities has become easier under GST.
Different prices no more:
The ECommerce websites have become so popular in India because of the convenience they provide. And also because products are much cheaper as compared to our local markets. Most ECommerce websites are pan-India. Hence, goods are available from different corners of the country. As a result of differential VAT rates, the goods were cheaper or expensive depending on the state. GST has turned India into a common market with the same tax rate applicable all over the country. Thus, the tax on most products is now the same in every state.
Impact on Discounts or Incentives:
Under GST, the tax is computed on transaction value (value of goods or services). This transaction value may include Pre/Post supply discount. The tax is charged based on transaction value. Whether shopkeepers incorporate discounts or not, depends on the discount category.
Pre-supply discount: Discount permitted before or during the supply time and included in the invoice. If it is a pre-supply discount, it does not form a part of the transaction value.
Post-supply discounts: Discount provided after affecting the supply. If it is a post-supply discount, then it will form the part of the transaction value.
Cash backs & promo codes fall under the post-supply discount category. Shopkeepers will have to re-examine the cash backs and promo codes to suit these new changes.
So we see, the impact on end users is not as drastic as people were expecting.
Unless, the suppliers withdraw the discounts and buy-back offers.
Now, let’s take a look at how GST has impacted the E-Commerce Industry