IndiaTech.org, ADIF and Nasscom have approached the government to reduce the Goods and Services Tax (GST) compliance burden on small online sellers.

They found many micro, small and medium enterprises hesitating to shift their work online due to the heavy tax compliance under the GST law.

Not only does this discourage MSMEs from exploring online marketplaces, but impairs India’s vision as a digitally powered economy.

According to them, the compliance standards may stifle sellers whose present incomes are substantially below the GST thresholds.

As a result, even if their sales do not exceed the prescribed threshold for GST exemption under the GST law, these enterprises must register for the tax and comply on a regular basis, they have stated.

The requirement of GST registration for online sales with a turnover of less than Rs 40 lakh could be due to the fact that the exemption does not apply to inter-state transactions and only applies to intra-state trade, according to IndiaTech.

The Alliance of Digital India Federation (ADIF) had previously urged the government to level the playing field between online and offline enterprises, particularly in the post-pandemic economy, to allow entrepreneurs to thrive.

Small firms are hesitant to register under the GST law, according to Nasscom, not to escape taxes, but to avoid the arduous and time-consuming registration and returns filing processes.

"We have requested the government to allow such sellers to avail the benefit of composition scheme, allow sellers to register warehouses of e-commerce operators across states, based on a single physical place of business registration in the home state of the seller, strengthen reporting-led safeguards in the periodical compliances undertaken by e-commerce operators to enhance the compliance rating of the ecosystem…”, wrote Nasscom.