How GST will effect e-retailers?

The execution of GST is likely to simplify the logistics issue for the online commerce companies.
How GST will effect e-retailers?

Indirect taxes in India have driven businesses to rebuild and demonstrate their production network and systems owing to variety of assessments and costs included. With expectations that the Goods and Services Tax (GST) will see the light of the day, the way India works together will change, until the end of time.

The Indian economy has undergone a lot of changes in the last few years and therefore it has changed the expectations and requirements of people. The result of technological advancement taking place in all the industries and as the Indian e-commerce industry is a part of the technological and strategic advancement. Thus, it will lead to a new development in tax regimes.

The implementation of the GST, the Indian indirect tax system (excise, state-level VAT, service tax) will evolve. The new system of GST is a single comprehensive tax regime and will be applicable across all states in India, on sale, manufacture and consumption of goods and services. GST will be applied across different states; e-commerce companies (as well as those from other industries) won't be struggling with the complex regulatory structure that is currently prevailing in the country. Not just this, they will be able to devise strategies keeping in mind the norms of GST.

The new tax regime will be levied on both goods and services and will replace most of the indirect taxes with a single tax. Its structure is going to be a dual structure, focusing on both a central component levied and collected by the centre and a state component levied and controlled by the states.

The execution of GST is likely to simplify the logistics issue for the e-commerce companies and not just this, the practice of companies to minimize their tax liabilities by finding both loopholes in existing sourcing and the distribution and warehousing strategies will be undergoing a change.

The new hub for vendors across country is online networking or social media websites which has empowered them to examine and analyze the customer decisions on the basis of their purchase activities. Twitter, Facebook, LinkedIn, Google+ and many other social networks has offered a new medium for simple log-in and purchase. Not just this, customers are able to stay updated through multiples posts distributed on these different forms of media. Further, promotions and advertising on these social websites has increased the odds of success of creating transactions to numerous folds. One will see advancements in Mobile Commerce and Online Grocery Stores. There are huge possibilities for advancement in logistics issues as well.

Some critical sectors, with the help of GST, for instance, consumer durables and FMCG, Media, Automobiles and entertainment, stand to gain their present levels due to the overall reduction that will take place in tax rates and seamless flow of credits.

The service areas, i.e., banking, telecom and e-commerce trade will be seeing marginal increment in cost to end customers in the beginning after the implementation of GST as a result of the growth in tax rate. However, in the long run it will result in the reduction in cost to customer on the account of business and tax efficiencies.

In conclusion, the new tax regime comes with its complications. However, anything that is new will come with its own set of challenges and have an effect on the working of the economy of the country. But, the GST will bring about more transparency and simplification and will be a boon to the e-commerce industry and not only this, it will be providing a much needed legal framework for e-commerce firms to ensure their proper operations in India.

The article has been penned down by Ashish Gurnani&AashrayThatai, Co-founders of PostFold

Publish Date
Not Sponsored
Live: People Reading Now