India is on the brink of Goods and Service Tax (GST), a single unified indirect tax for the whole nation. GST is one of the biggest tax reforms in India which marks a significant move towards the indirect taxation field. The tax will be levied by the central and state governments together to subsume a host of indirect central & state taxes like Excise Duty, Service Tax, State VAT, etc.
From 1st July 2017, there will be a single tax on the supply of goods and services, from manufacturers to the customers.
Tax on eCommerce:
The GST Council decided to levy tax e-commerce on sellers at 1%. The Centre and the States would each impose a tax at 0.5% at source on online sellers. Moreover, the GST law has a provision to levy a tax at source of up to 2% on eCommerce companies.
Tax on Goods:
The Government is keeping a large section of items under 18% tax slab. Here’s a list of major items under different tax slabs.
- No Taxes (0%): Education, healthcare, and general railway travel
- 5% Taxes: Life-saving drugs, Indian Sweets, Edible oil, sugar, spices, tea, coffee, Packaged food items, Apparel under INR 1000, Transport of goods by air, road, and railways as well as railway travel in AC classes and cab aggregators
- 12% Taxes: Works contracts, business class travel on airlines, Computers, Processed food, cutlery
- 18% Taxes: IT, telecom, financial services, Capital goods and industrial intermediaries, Hair oil, toothpaste and soaps, Footwear (Cost more than INR 500), software, Household items, branded products/apparel
- 28% Taxes: Small Cars, Consumer Durables, Specified Luxury and Sin items, High-end motorcycles, aerated drinks, chewing gums, paint, deodorants, and cigarettes
The impact of GST on businesses & the Industry:
- Tax rates and structures Uniformity: GST will help in eliminating the aforesaid taxation problem and thus, provide a further boost to the e-commerce market. It has been perceived as the end of endless taxes levied on the companies. Now, GST tax will be levied on the manufacturing cost at the point of sale, solving the problem of tax being taken more than once on the same product/service.
- Logistics Simplified: The introduction of GST can simplify the biggest hurdle of all time, i.e., Logistics for eCommerce players. Companies usually design their supply chain strategies – Sourcing, Warehousing, and Shipping so that the tax liability gets minimized.
Companies can now focus on their actual growth strategies as having a warehouse in every state is no longer a need. They can easily fulfill all demands of the customer with a warehouse at a strategic location.
- Compliance: On a monthly basis, the eCommerce companies will need to report the products supplied by the sellers and also, the amount of TCS collected for it. Moreover, the sales declaration will be done both by supplier and eCommerce player which should match. The product/service codes and the rates for each item need to be reported separately. However, GST will help reduce the tax compliance cost for the eCommerce business in the long run.
- Increase in credits: GST has definitely widened the scope of input GST credit as the ‘input tax’ now subsumes any goods/services used by the organization during the business. Thus, the cost of running a business will be reduced, for eCommerce companies and sellers as all the taxes are covered under GST.
- Gain to manufacturers and exporters: This reform will help the local manufacturer and exporters as the subsuming all the central and state taxes in GST will reduce the cost of manufactured goods and services. They will give a boost the growth of Indian goods and services in the international markets.
GST will benefit the eCommerce/Retail industry in turbocharging their growth and attracting foreign investors as this reform will allow the country to be positioned as industry-friendly.
How Technology Can Help
Technology will play a major role in ensuring the compliance to all the rules of the GST tax regime and automate all the back-end processes with compliance to the GST’s regulatory norms.
How Vin eRetail Can Help
GST will be live on July 1 and Vin eRetail is fully GST- ready to ensure that your business processes are fully automated are ready too!
Vinculum wants to ensure that you concentrate on your core business and let them do the heavy lifting!
Vin eRetail is a SaaS-based Order Fulfillment and Inventory Management suite of products to enable multichannel retailing.With 100+ integrations to Marketplaces, 3PLs & web fronts, Vin eRetail is turbocharging the Online businesses and helping them to sell across channels while managing orders & inventory with ease.
View the complete list of integrations here –https://www.vinculumgroup.com/integrations-help-you-grow/
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