Daijiworld Media Network - New Delhi
New Delhi, Oct 22: Small e-commerce sellers will be able to access a simplified Goods and Services Tax (GST) registration facility from November 1, following a recommendation by the 57th GST Council meeting earlier this month, a senior Finance Ministry official said on Thursday.
Speaking on the sidelines of an event organised by the Associated Chambers of Commerce and Industry of India (Assocham), the official said the necessary system changes had been completed and the facility would be activated on the GST portal at the beginning of next month.
The Council proposed an optional simplified registration mechanism under a new Rule 14B of the Central Goods and Services Tax (CGST) Rules, 2017. Under this provision, small sellers supplying goods exclusively through electronic commerce operators (ECOs) can register in other states by declaring the e-commerce platform's warehouse as their principal place of business. This will eliminate the need to establish their own offices or shops in those states.
The facility will be available to sellers whose monthly input tax credit does not exceed ?2.5 lakh. Applicants must already have a physical presence and GST registration in at least one state, which will remain their home state. Registrations under the new scheme can be used only for supplies made through e-commerce platforms, with the consent of the respective operator obtained through the system.
The official said detailed circulars explaining the registration process and related notifications would be issued in the coming days. Notifications and circulars concerning certain refund-related changes approved by the Council are also expected shortly.
Prashanth Agarwal, partner at Price Waterhouse & Co LLP, described the move as a significant reform that could benefit the wider economy by encouraging small sellers to expand beyond their home states.
He said compliance requirements, particularly the registration process, had discouraged many small e-commerce sellers from expanding nationally. Enabling e-commerce platforms to support sellers through the GST Network (GSTN) portal could simplify the process and encourage wider adoption, he added.
Agarwal also suggested that the government monitor the scheme's adoption, track the expansion of small sellers and assess and publish its benefits over time.
Separately, a senior official said a committee of officers would examine Section 16(2)(c) of the CGST Act, which links a buyer's eligibility for input tax credit (ITC) to the supplier's actual payment of tax to the government. The committee is expected to submit its report within three months, after which the matter will be placed before the GST Council for a final decision.
The 57th GST Council referred the issue to the committee following requests from several states for a more detailed examination. Under the current provision, genuine buyers may face denial or reversal of ITC even if they possess valid invoices, have received the goods or services and have paid their suppliers, if the suppliers fail to deposit the applicable tax with the government.
The official indicated that any decision arising from the committee's recommendations could be implemented from April 1, 2027.
Shivam Mehta, executive partner at Lakshmikumaran & Sridharan Attorneys (LKS), welcomed the proposed review, saying it could provide relief to honest taxpayers who fulfil their obligations but risk losing ITC because of their suppliers' defaults. He said the final outcome should ensure that genuine taxpayers are not penalised for circumstances beyond their control.