Foreign ecommerce companies rush to register for GST in all states

  • 20-Sep-2018
  • Foreign ecommerce companies rush to register for GST in all states

Amazon, Google, Apple and other foreign companies operating in the ecommerce space will have to register themselves for goods and services tax (GST) in all the states in the next 10-12 days. 

The government has said ecommerce companies need to collect tax at source from October 1. To comply with tax collected at source (TCS) rules, ecommerce players need to register with every state. This provision applies to foreign players as well to cater to Indian consumers. 

The industry has pitched for single registration in place of multiple state registrations as it would increase their compliance costs, but the government has so far maintained that they need to register in all states. Industry is pinning hopes on government permitting single registration. 

Under the provisions, notified entities have to deduct up to 1% state GST and 1% central GST on intrastate supplies of over Rs 2.5 lakh. In the case of interstate supplies of over Rs 2.5 lakh, TDS will be 2% integrated GST. These provisions are aimed at checking tax evasion as TDS/TCS will leave a trail of transactions. In the case of foreign ecommerce platforms, there will be no TCS liability if the seller is based outside India. 

A clarification to this effect was given at a meeting between ecommerce players and the Central Board of Indirect Taxes and Customs held on Tuesday, according to a person privy to the deliberations of the meeting. 

Though, the provision mentions the rate as up to 1%, the rate for now will be 0.5% each for state and central GST. 

For ecommerce companies, this implies a deduction of 1% from the payments to their suppliers for goods sold on their platforms that will have to be deposited with the government. Tax experts said the government should provide for centralised registration for foreign ecommerce players. 

“There is no exemption from registration for foreign ecommerce companies,” said Pratik Jain, national indirect taxes leader at PwC. “Further, as per the current provisions, even foreign companies will have to take registration in each state where the vendors might be supplying from. It would mean significant increase in compliances,” he said. 

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