The introduction of GST is the boldest and single largest tax reform since the opening up of economy. It aims at providing a cohesive tax approach across India. For online businesses especially for eCommerce, it is a welcome step as passing of GST tends to rationalize seamless integration of goods and services across the country. Following are the key impacts and recommendations for an online business on account of GST: GST not only revamps the current paradigm of indirect taxes but also improves tax compliance.
Ease of Starting-up -GST brings in the uniformity through centralized registration which makes it easier for online businesses to get started. This centralized system replaces the old and rigid process of VAT registration issued by Sales Tax Department.
Higher Exemptions - Earlier businesses with turnover of more than Rs. five lakh needed VAT registration. GST increases this bar to Rs. 10 Lakh, thereby bringing respite for new businesses.
Simple Taxation - GST aims to minimize the hitches in the double tax system. It simplifies the process by integrating all taxes into a Uniform GST.
Reduction in logistic costs - GST eliminates border taxes which are levied upon movement of goods from one state to another. Hence the costs inculcated in the logistics movement will come down. Seamless interstate flow of goods will further accelerate the demand for logistic services. GST reduces the cost competitiveness as players are directly brought under a single tax regime.