Push For ONDC? GST Council Waives Registration Requirement For Small Online Sellers

Clearing the decks for easy listing of small players on ecommerce platforms, the Goods and Services Tax (GST) Council on Wednesday (June 29) waived the mandatory registration requirement for businesses with annual turnover of up to INR 40 Lakh and INR 20 Lakh for goods and services, respectively. 

“Waiver of requirement of mandatory registration under section 24(ix) of CGST Act for person supplying goods through ECOs, subject to certain conditions, such as, first, the aggregate turnover on all India basis does not exceed the turnover specified under sub-section (1) of section 22 of the CGST Act and notifications issued thereunder and, second, the person is not making any inter-State taxable supply,” a release from the Ministry of Finance said. 

Currently, sellers supplying through ecommerce operators must be registered even if their aggregate annual turnover is below the threshold limit of INR 40 Lakhs or INR 20 Lakhs.

The notification also said that composition taxpayers would be allowed to make intra-state supply through ecommerce channels, subject to certain conditions. It is pertinent to note that composition taxpayers – businesses with turnover up to INR 1.5 Cr – can only make local sales, as against normal taxpayers that can make both interstate and intrastate sales. 

The announcements will tentatively come into force from January 1, 2023. The details of the scheme will be devised by the law committee of the Council, the release said. 

The move will benefit approximately 1.2 lakh small traders, an official told PTI. “Such a move will ensure parity between online and offline suppliers, and will give a major push to ease of doing business. This is especially true for micro and small businesses, artisans and women entrepreneurs working from home,” the official added.

Push For ONDC?

The move comes at a time when the government has set its eyes on operationalising the Open Network for Digital Commerce (ONDC). Many had pointed out that the GST registration requirement for ecommerce suppliers could prove to be an impediment in the listing of small businesses on the ONDC. 

With this move, the government has removed a roadblock, making it easy for platforms to onboard sellers without the mandatory GST registration. 

ONDC aims to provide a level playing field to small businesses in the ecommerce space and to curb the dominance of deep-pocketed players like Flipkart and Amazon.

Earlier this month, Union Minister Piyush Goyal, while reviewing the pilot launch of ONDC, had called for prioritising strategies towards inclusion of non-digital traders and artisans on the platform.

A Parliamentary panel had also observed that the mandatory GST registration placed an undue burden on small sellers operating on ecommerce platforms. It had also called for extension of the exemption available to offline businesses to online players. 

The move is also aimed at increasing compliance and plugging revenue leaks. It would also enable micro, small and medium enterprises (MSMEs) to list on ecommerce platforms and create alternate streams of revenue.

A slew of other decisions were also taken at the second day of the GST Council meeting on Wednesday, including deferment of the proposal to impose 28% GST on casinos, online gaming, and lottery. 

According to Inc42, the total addressable ecommerce market opportunity in the country is projected to reach $200 Bn by 2026.