Ecommerce took its due to time to penetrate into the cash-dependent Indian market, gaining strong traction from new government, which favors next generation online transactions and is inspiring world’s largest democracy to go cashless. Latest tax reform, called GST, set for a roll-out from July 1st, 2017, is expected to prove to be a major boost to the ecommerce industry in India, as it will subsume multiple indirect taxes that complicated the processes, such as service tax, octroi, central excise, and value added tax.
While we will understand the exact ramifications for GST on Indian taxing system only once they are completely installed, certain industries are highly likely to benefit from it, particularly those pertaining to goods and services, including digital products over the digital or electronic network.
Free Inter-state Goods Transportation
Amazon and Flipkart, the two most prominent names in the India’s ecommerce sector, will rejoice GST as it will enable swift inter-state movements of goods, helping them make their on-time deliveries and gain respite from seize of shipments due to the lack of proper documents. Even the smaller e-commerce and local vendors will benefit from GST, cutting down the cost of last-mile deliveries and delays at check-posts.
The logistics and warehousing departments will also gain by avoiding central sales tax (CST).
GST will Encourage Entrepreneurs
Entrepreneurs of all kinds have had a hard time setting up a business in India, knocking multiple doors in several cities and states to get their VAT registered and gain clearance at various entries. With GST, businesses under 20 lakhs will be exempted from VAT, a threshold which earlier was only 5 lakhs and retrained smaller businesses. GST is expected to take India significantly higher in the World Bank’s index of countries with ease of doing business.