Govt Monitoring Ecommerce Platform For GST 2.0 Compliance

SUMMARY

Sources said that the Union revenue department is monitoring whether taxes have been commensurately cut on daily-use FMCG products, from shampoos to pulses

Many ecommerce platforms are said to have cited 'technical glitches' when discrepancies in pricing were pointed out by authorities

This follows the GST Council, earlier this month, rationalising GST tax slabs and trimming the four-tier structure down to two slabs, and introducing a steep 40% bracket for “sin” goods

The government is reportedly monitoring ecommerce platforms to ensure the recent goods and services tax (GST) rate cuts are passed on to the end customers.

Sources told news agency PTI that the Union revenue department is monitoring whether taxes have been commensurately cut on daily-use FMCG products, from shampoos to pulses. As per the report, the Centre also flagged the issue with certain ecommerce players.

“The government is monitoring e-commerce operators for a smooth and genuine passage of GST cuts. The revenue department is monitoring whether taxes have been cut commensurately,” a source reportedly said.

The report added that ecommerce platforms cited ‘technical glitches’ when discrepancies in pricing (pre and post-GST rate cuts) were pointed out by officials. This active monitoring came after authorities received multiple complaints regarding not compliance with the new pricing norms.

“(The) government is keeping a strict vigil,” a source reportedly added.

This follows the GST Council, earlier this month, rationalising GST tax slabs and trimming the four-tier structure (5%, 12%, 18%, 28%) down to two slabs, while introducing a steep 40% bracket for select luxury and sin goods.

The new regime came into effect starting September 22.

However, the new rate cuts coincided with the festive season sale at all major ecommerce companies. In any case, online marketplaces offer steep discounts and offers to woo customers and shore up numbers in what is the biggest sales event of the year for these players.

That said, D2C brands are expected to drop the prices of their products to comply with GST law’s anti-profiteering provisions, which strictly mandate that any benefit from the reduced tax must be passed on to consumers.

On the other hand, the rate cuts are expected to boost consumer spending and, as per experts, bring down inflation to some extent. This is also expected to bring in first-time users, who have previously stayed away from D2C products due to their premium pricing, and expand the total addressable market for digital-first brands.