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Published on:
February 23, 2023
By
Pranjal Gupta

CAIT Requests Waiving the Mandatory Requirement of GST No. for Trade on E-commerce

The Confederation of All India Traders (CAIT) has recently requested the government to waive the mandatory requirement of Goods and Services Tax (GST) registration for traders who are involved in e-commerce. The organization believes that the requirement is discriminatory and that it is unnecessarily burdening small traders, who are already struggling to keep afloat due to the impact of the COVID-19 pandemic.

Currently, the GST Council mandates all e-commerce operators to collect tax at the source (TCS) from traders who sell goods through their respective platforms. This means that any trader who wants to sell their products online must register themselves under GST, irrespective of their turnover.

The CAIT has argued that this mandatory requirement is unfair for small traders, who don't have the resources to comply with the complicated GST compliance requirements. They have noted that this requirement also leads to an additional financial burden for small shops and traders.

The Impact of the GST Requirement

The GST registration requirement was introduced in 2017 to provide a simplified and streamlined tax system for businesses in India. However, the rule has not gone down well with small traders. The GST tax rate for small businesses is 1%, which is significantly higher than the earlier rate of service tax that was levied on them (0.5%).

In addition, the GST compliance process is quite complicated, and many small traders do not have the resources to hire tax professionals to help them navigate the rules. This requirement puts small traders at a significant disadvantage, as it makes it challenging for them to sell their products online and compete with larger e-commerce players.

The government has taken some steps to help small traders comply with the GST requirements. For example, it has allowed small businesses with a turnover of up to Rs. 40 lakhs to be exempt from GST registration. However, this limit does not apply to those who sell their products through e-commerce platforms.

The CAIT's Proposal

The CAIT has proposed that the government should waive the mandatory requirement of GST registration for small traders who are involved in e-commerce. The organization believes that this move will help small traders sell their products online without any additional financial or compliance burden.

The CAIT has also stated that the TCS collected by e-commerce platforms can be used to verify the turnover of small traders. This system will help the government keep track of sales and taxes and ensure that small traders are not evading taxes.

The CAIT has also suggested that the government should introduce an alternative tax collection mechanism for small traders. This system will be a simplified tax collection process that will reduce the burden on small traders and enable them to focus on their business operations.

Conclusion

The mandatory requirement of GST registration has been a topic of discussion among small traders in India for a long time. The CAIT's proposal to waive the requirement for small traders who are involved in e-commerce could be a game-changer for small businesses. It will help them sell their products online and compete with larger e-commerce players.

The government should consider the CAIT's proposal seriously and take steps to simplify the GST compliance process for small traders. This move will not only help small traders but also contribute to the growth of the Indian economy.

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