Top 5 GST rules that retailers must know!

The retail sector has been profoundly impacted by the GST taxation amendment.
Top 5 GST rules that retailers must know!

The GST taxation has brought a lot of changes in the pricing strategy of the commodities and product. This new tax amendment has made business very simple as a range of indirect taxes has been submerged to form a single provision. Almost every segment of the business has been affected by this amendment.

The retail sector has been profoundly impacted by the GST taxation amendment. In the previous year, the retailers had to face a lot of confusions regarding this new concept. Moreover, the implementation of the norms of the new tax regime took too much time to get introduced. The confusion also raged among the consumers. Now, the confusion has been eradicated to a huge extent and the effect is becoming clarified. The new tax regime took a huge turn and witnessed a 2-crore registration. At this point, every retailer needs to incorporate a record keeping and profound accounting system. This cost around INR 5000-10,000 per month extra.

The organized retail segment is still less than 20% of the entire retail industry. On the other hand, the e-commerce part of the retail industry is just 7% of the total volume.

Here are the top 5 GST rules a retailer should know.

  1. E-commerce as per GST

As per Section 43B(d) of the Model GST Law, e-commerce retail platform is an electronic network via which receipt of a supply of goods and services and fund and/or data transmission takes place. The consumers find the products or services using the internet to make a buying decision without physically visiting the brick and mortar store.

A person, who is supplying services or goods with his account, is not considered as an e-commerce operator. On the contrary, a person, who is providing knowledge and infrastructure for the supply of goods and service for other businesses, is an operator. For an instance, Flipkart is an operator when it is allowing the use of its platform for the other businessmen to cater products. In the same way, Flipkart is not an operator when it is selling its own products.

  1. Tax Collection at Source (TCS)

As per the GST rules, Section 43C(1) depicts that the operator of e-commerce can collect or deduct a particular amount from the payable amount to the supplier in accordance to the supplies done through the e-commerce platform. This is called TCS.

  1. Registration and threshold exemption

As per Section 19R/W, Schedule-III of Model GST Law, irrespective of the evaluation of the supply chain, an e-commerce operator or a retailer needs to register the business. All the retail business is liable to GST registration.

There will be no relaxation regarding threshold exemption. As mentioned earlier, irrespective of the supply chain valuation, the supplier needs to register his business based on the same section of the law.

  1. Tax replaced by GST

 The implementation of GST has witnessed the replacement of various tax regimes. The list of such taxes is mentioned below.

  • Central Excise Duty
  • Value Added Tax
  • Service Tax
  • Countervailing and Special Countervailing Duty
  • Entertainment
  • Entry
  • Luxury
  • Purchase
  • Lottery
  • Advertisement
  • Octroi

Short-term impact

The short-term effect of the GST tax regime will be inflation. The tax rate under the new regime varies between 5% and 18%. The restaurants, movie theaters, and other entertainment centers will increase the price of their services. On the contrary, Liquor and petrol got exempted from the tax regime.  Many experts feel that this is a part of a capitalist conspiracy as these two commodities are one of the major sources of revenue for the government. The exemption of petrol will also make supply logistics cheaper. This will help the retail industry to grow further.

  1. Uniformity will prevail

Both the organized and unorganized retail players will be well benefitted due to the one-stop tax solution. The uniformity of the tax regime will make it more clarified and the tax credit will become more available for the government.

The smaller retailers with a turnover within INR 50 Lakh can enjoy a relaxation in account maintenance and tax payment. The threshold for registration is INR 20 Lakh. E-commerce, on the other hand, will be very much benefitted by the uniformity. The different state tax schemes will be singled.

The benefits of GST regime will be visible soon enough. The consolidated tax regime will reduce confusion and downtime to do business, practically boosting all types of retail ventures.


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