The Central Board of Indirect Taxes and Customs (CBIC) will present to the GST Council next month a scheme to significantly reduce the compliance burden of small suppliers of e-commerce companies, two government sources told Moneycontrol.

The council approved drawing up of such a scheme in September 2025 but the details and the framework will be presented at its next meeting in New Delhi on September 12.

According to sources, small suppliers will not need separate good and services tax (GST) registrations in every state they operate in.

A single registration, with that state’s GST authority mandated to conduct audits and ensure compliance would be enough.

“According to the framework, e-commerce companies will be given the responsibility of ensuring that the suppliers are registered with the authorities,” of the officials said.

Why suppliers need relief?

A supplier may have its principal place of business and GST registration in one state but want to sell goods in another through an e-commerce operator. Since, the goods are being sold in other states, the supplier needs to have a registration there as well.

Authorities penalise suppliers for non-compliance if they fail to register in the states where their goods are being sold.

“This has been discussed at length… why should the supplier be held responsible for non-compliance in other states, when they are effectively operating from only one location,” the official said.

“The proposed mechanism will address this by allowing the warehouse of the e-commerce operator to be treated as the supplier’s place of business in that state,” a second official said.

“The objective is to provide relief to micro enterprises. It will make it easier for them to expand their reach without having to create a physical presence in every state.”

Moreover, due to inter-state transactions, e-commerce companies often struggle to claim input tax credit, as the supply and sale of goods are in different states. And the small suppliers don’t at times deposit the input tax with the government or fail to upload their outward supply details in the correct GST forms, that legally prevents the e-commerce company or end-buyer from claiming input tax credit (ITC).

“This results in disputes around principal place of business (PPoB), physical records and warehouse stock, leading to registration suspensions, ITC disputes and TCS refund blockages.”

Who will benefit?

The facility will be meant only for micro-suppliers of e-commerce companies and a threshold will be prescribed.

It will not be available to large companies that can set up their own place of business and infrastructure, the second source said. The threshold is not yet known.

“E-commerce operators should assist in seller verification (KYC), transaction reporting and data reconciliation but they should not be made responsible for guaranteeing or bearing the tax liabilities of independent sellers.”