The simplified goods and services tax (GST) registration facility for small e-commerce sellers recommended by the 57th GST Council meeting earlier this month will be enabled from November 1, a senior finance ministry official said on Thursday. Speaking on the sidelines of an event organised by the Associated Chambers of Commerce and Industry of India (Assocham), the official, requesting anonymity, said the system changes required to start the new registration route were ready and the facility would go live on the GST portal from the beginning of next month.
The Council had proposed a simplified, optional registration mechanism under a new Rule 14B of the Central Goods and Services Tax (CGST) Rules, 2017. Under this route, small sellers of goods who supply exclusively through electronic commerce operators (ECOs) can register in other states by declaring the warehouse of the e-commerce platform as their principal place of business. They will not need to set up their own office or shop in those states.
The facility is available only to sellers who pass on input tax credit of not more than ₹2.5 lakh a month. They must already have a physical presence and GST registration in at least one state, which will remain their home state. The registration obtained under this scheme can be used only for supplies made through e-commerce platforms. Consent of the e-commerce operator will be obtained through the system.
The official added that detailed circulars explaining the registration process, along with related notifications, would be issued in the next few days. Notifications and circulars covering certain refund-related changes approved by the GST Council are also expected in the coming days.
"It is a radical reform which can have a positive impact beyond GST on the economy at large. Currently, such e-commerce sellers are generally reluctant to expand beyond their home state considering the compliance requirement specially the whole registration process. By enabling e-commerce platform players to support these sellers in taking such registration through the GSTN platform should go a long way in solving this challenge. One expects the whole process to be system-driven and simple to comply with. It would be interesting to see the adoption of the new system," said Prashanth Agarwal, partner with Price Waterhouse & Co LLP.
The government should track the adoption of this new regime and how small sellers expand their presence, and should assess and publish its benefits over a period, he added.
Also Read
Separately, another senior official said the restriction under Section 16(2)(c) of the CGST Act — which links a buyer’s input tax credit (ITC) to the actual payment of tax by the supplier — would be taken up for detailed study by the committee of officers formed to examine it. The official said the committee was expected to submit its report within three months. Once the report is ready, it will be placed before the GST Council for a final decision.
The 57th GST Council had referred the matter to the committee after several states sought a wider examination of the issue. At present, genuine buyers can face denial or reversal of ITC even when they hold a valid invoice, have received the goods or services, and have paid the supplier, if the supplier fails to deposit the tax with the government. The official indicated that any decision arising from the committee’s recommendations was targeted for implementation from April 1, 2027.
"The words of the Government official are promising and encouraging on the issue of Section 16(2)(c) of the CGST Act. It is heartening to see that the matter is being taken up for a detailed examination, with implementation of any decision targeted for April 1, 2027. Let us wait for the fine print and the committee’s recommendations, while hoping that the final outcome brings much-needed relief to honest taxpayers who have fulfilled their obligations but face the risk of ITC denial due to the default of their suppliers," said Shivam Mehta, executive partner at Lakshmikumaran & Sridharan Attorneys (LKS).
The ultimate objective is to ensure that genuine taxpayers are not penalised for circumstances beyond their control, Mehta added.