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30/09/2020 12:42pm

GST compliance parity needed between offline & online sellers: FISME

image GST compliance parity needed between offline & online sellers: FISME

New Delhi, Sept 30 (KNN) The GST compliance requirements are proving difficult for thousands of Micro and Small Enterprises (MSEs) while they make transition from offline to online selling platforms.

In a virtual meeting organized by Federation of Indian Small and Medium Enterprises (FISME) it was brought out that regulation changes for online sellers from registration to composition scheme to tax collected at source.

Post Covid, due to lockdowns and disruptions, smaller players and artisans are trying to sell their goods online but are finding GST compliances onerous.    

In the first of series of seminars being organized by FISME under ‘Survival and Growth Strategies, During and Post COVID World’, Mr. Santanu Mitra, Additional Development Commissioner, Ministry of MSMEs, Government of India, shared his views on the subject as the keynote speaker at the event.

Santanu MItra

The discussion was joined by senior tax policy experts - Mr. Kunal Wadhwa - Partner (Indirect Tax) PwC, Ms. Vidushi Gupta – Tax lawyer & legal scholar and Mr. Shekhar Tomar – Assistant Professor, Economics and Public Policy, Indian School of Business.  

The seminar touched upon several aspects related to growth and survival of the MSME ecosystem such as how tax barriers are discouraging offline players to start selling online, how the revival of MSMEs can be supported by the adoption of e-commerce, GST and other heavy compliance requirements for online sellers have been discouraging small businesses, preventing them from becoming a part of the digital economy, and the immediate need to educate and encourage MSMEs to sell online, among others.

The COVID-19 pandemic has severely disrupted the 60 million strong MSME sector in India that employs over 110 million people and that is considered to be the backbone of the Indian economy.

As the festive season begins in the country, MSMEs would benefit by a transparent and enabling taxation policies. A sector that produces a vast variety of goods and services to serve Indian consumers, through myriad supply chains, and with the help of millions of retail and trading enterprises, has been the worst affected.

The regulations prescribed in the GST Act for businesses selling online impose a higher tax rate and compliance burden in comparison to businesses selling offline thus preventing MSMEs to swiftly make a transition to online platforms.

The conversation also delved into how the tax policies prescribed in the GST Act are restrictive for online sellers, and took note of the issue to bring together the right set of stakeholders to discuss the need for parity in taxation for online and offline sellers. The role of the Union Government in considering the potential of e-commerce as an ally for MSME revival and a pillar of support to the sector and sellers was also highlighted.

Ms. Vidushi Gupta, Tax Lawyer and Legal Scholar said, “The COVID-19 crisis has disproportionately impacted the MSME ecosystem. Pre-COVID, MSMEs viewed digitalisation as a tool to widen their offerings. Post-COVID, digitalization has become a necessity for survival. It is imperative that policy reforms specifically target easing the process of digitalization for MSMEs.”

“The GST policy on E commerce needs to be completely reviewed as a successful tax policy needs to keep pace with technology, particularly when business is facing an unprecedented challenge like we are witnessing at present. The current GST framework provides impediments in selling online especially for MSMEs,” said Mr. Kunal Wadhwa - Partner (Indirect Tax) PwC.

The speakers agreed that the need of the hour is to have the right policies to support the revival of Indian MSMEs. The deliberations brought to light the existing challenges and regulatory bottlenecks in India’s GST requirements, and key policy considerations that would not just encourage new and emerging players but would also help the larger industry streamline their businesses towards revival.

President FISME Dr. Animesh Saxena stressed the need to bring parity between online and offline  sellers.

“The need of the hour is to encourage and enable smaller players affected and uprooted by  the COVID pandemic  and not make their life more difficult”, he said.


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