Goods and Services Tax (GST) impact on eCommerce

GST is one of the most noteworthy tax reforms in the history of India. The GST bill was implemented to simplify the Indian tax structure. GST is said to be a tribute to the maturity and wisdom of India’s democracy. All the major and minor Indian industries fall under the blanket of its impact. A report says, nearly one crore businesses in India have obtained GST registration. The well-reputed e-commerce sector of India falls under this category.

The industry has affected the aspect of customer outreach, like never before. The e-commerce industry empowers business owners to create a global audience and an international brand. India’s e-commerce industry is estimated to have crossed rupees 211,005 crores last year and expected to generate $100 billion online retail revenue by 2020. GST acts as a significant boost to e-commerce revenue. Government has permitted Foreign Direct Investments under the eWay Bill model to promote e-commerce market place in India. GST applies to all the sales on the e-commerce platform; its liability lies with the vendor.


Let’s delve in deeper to see the impact of GST on the e-commerce marketplace.

1.Easy to File Returns

The e-commerce sellers follow the online GST filing procedure, same as the traditional retailers. It surely has positive outreach to the e-commerce segment of our nation. They are unable to file the quarterly returns although they have a revenue of under 75 lakhs. Also, they are accountable to a deduction of 2% on the net value of the sales.

The taxation scheme says the e-commerce operator ought to collect the amount at 1% (0.5% CGST + 0.5% SGST) of the net value of the supplies. It enables the Indian administration to track e-commerce businesses. The form GSTR-1 enclosing the details of outward supplies is submitted every month. Later, the seller receives form GSTR-2 detailed with the taxes charged by the e-commerce marketplace and the seller again sends it back after reviewing.

It results in a 20% reduction in the operating cost, logistics cost and warehousing, encouraging the vendors to maintain warehouses at strategic localities and operate efficiently.

2.Reduced frauds

The advent of this taxation model made it easier to keep the fraudulent activities at bay. It is mandatory for all the e-commerce businesses across the country to register under the GST bill India scheme. Irrespective of turnover, all the suppliers on the electronic commerce platform have to register with the tax authority.

At the end of the month, the sales reported by the e-commerce operator and those declared by the supplier ought to be balanced. It aims to prevent misuse by fraudulent sellers. Just in case, the sales value reported by the operator and declared by the supplier are not equivalent; the variance adds up to the supplier’s turnover.

3.Increased Reach of e-commerce Sellers

GST has given wings to the small and medium scale e-commerce vendors enabling them to compete with multinational companies. Earlier, the sellers had to operate within the confines of a single state due to the looming tax rates across the nation. The introduction of GST invoicing solution replaced the multiple taxes imposed in different states into a single tax across the country. Elimination of the confusing interstate taxation scheme made it incredibly easy for the e-sellers to cater to the customers across the nation with a single tax model.

This gave rise to the opportunities enabling the e-commerce business owners to reach out to a broader audience across the nation and world. It offered a common platform for all small, medium and big scale industries to compete on the same level. GST made it simpler for small businesses to provide more quantities that are flexible, better personal service and other benefits drawing shoppers away from more prominent suppliers. These businesses can grow without taking an extra tax burden.

4.Better Tax Credits

E-commerce businesses can reduce tax payments via input tax credits. Availing the input tax credit allows the e-commerce business owners to deduct the tax already paid on raw materials. The suppliers can claim the ITC for products or services bought to utilize for a business purpose. To avail the credits, the vendors should give a proper explanation of how the products or services are used. If the exploitation is for personal use and not for a business sale, tax credit can’t be claimed.

It is the responsibility of the e-commerce operator to file an electronic statement containing the detailed information of amounts collected and tax paid.

5.Refunds Under Cash on delivery

The shoppers across the nation opt for ‘cash on delivery’, and these sales witness the maximum return of orders. More than two third of the transactions are COD, and the percentage of cancellation of orders in India is tuned to 18% according to a report. In the case of cancellation of orders, confusions might occur while generating the refunds for already filed taxes. It becomes quite difficult for operators to seek refunds in case of returned orders for which tax has already been deducted. This may undoubtedly increase the compliance cost of the operator.


GST is one of the most significant fiscal reform in our country; it has affected all the large and small industrial sectors. Though the e-commerce industry is subjected to increased tax compliance, still it improves the market for local suppliers. Despite a little fuss in the GST market, the administration can regulate e-commerce transactions. It allows the suppliers to sell the products across the nation in any state with a single taxation scheme encouraging the sellers to start their business online. GST invoicing solutions modernized the start-ups by allowing them to compete with the multinational companies.

GST, though a simple tax, yet it felt complicated to many people as it was new. Many people want GST billing software for GST eFiling. If you face issues and want a GST return filling software for shortening the tedious and time-consuming process, then you can use our GST Software. It is convenient and straightforward to do online GST filing for small and big businesses. We provide affordable GST return filing packages so that your GST eFiling journey becomes smooth and hassle-free.