01.05.2023: FISME seeks GST parity between offline and online sellers for more MSMEs to get on e-commerce

MSME body Federation of Indian Micro and Small and Medium Enterprises (FISME) on Sunday requested the government for parity in GST compliance between offline businesses and online e-commerce sellers to encourage more MSMEs to get online. This was among the recommendations made by FISME to the MSME ministry’s Additional Secretary & Development Commissioner Dr Rajneesh to boost e-commerce adoption among small businesses.

The recommendations were made in consultation with over 40 delegates representing MSMEs, think tanks, payment service providers, e-commerce and last-mile delivery platforms, and industry organizations such as Amazon, Meesho, Zomato, BlinkIt, PayU, Shiprocket, among others.

One of the reasons for low digital penetration among small businesses is the complex GST compliance requirements needed to make the transition from offline to online selling platforms, FISME said.

Presently, while it is mandatory for online businesses to register under GST regardless of turnover, offline sellers with a turnover of more than Rs 40 lakh have to apply for GST. “This creates an unequal playing field between offline and online retail.” 

Anil Bhardwaj, Secretary General, FISME, said, “There is an urgent need to educate MSMEs on the benefits of online selling, such as access to a wider audience and nuanced market intelligence. We need to establish a level-playing field between online and offline businesses and limit the additional compliance burden imposed on online sellers.” 

Importantly, the government in June last year had announced that businesses with a turnover of up to Rs 40 lakh selling via e-commerce won’t have to apply for GST. However, this applied to only the intra-state supply of goods while multiple sellers also sell goods inter-state to customers via e-commerce. 

FISME also suggested provisions such as exemption from import duties on returns, inventory and order management support for new businesses, simpler funding options and subsidies for MSMEs, and efforts to drive awareness around digital marketing for new MSMEs. It also asked for an enabling e-commerce policy for simpler government policies for online businesses and the exemption of additional compliance obligations for online sellers.

“A favourable policy particularly for women entrepreneurs to increase their participation, a uniform e-commerce logistics policy that makes it easy for new MSMEs to reduce their transactional cost, driving awareness on the onboarding process and making the process easier, are some ways that will help small sellers,” said FISME in a statement. 

Moreover, an informational portal that serves as a one-stop-destination for regulatory policies will also help educate MSMEs, it added. 

“We are in line with the recommendations shared by FISME and the MSME representatives present today. We are committed to digitise businesses so that they can recognise the true value of e-commerce in growing their business and contributing to the economy at large,” said Dr Rajneesh.

Source: The Financial Express

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