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The Goods and Services Tax (GST) Constitutional  Amendment Bill was passed in Parliament late yesterday and ecommerce companies have widely hailed the move which will bring significant clarity and cut excessive taxation. The GST  is a uniform indirect tax which is levied on goods and services across the country.

However, the exact rate and implementation will be discussed over the next few weeks while the full roll out is expected to take a couple of years, as indicated by this Mint report.

Here’s how the GST will affect ecommerce:

1. Reduce barriers between states:  For ecommerce and logistics companies, it would reduce the barriers for interstate deliveries. “GST will also open new markets for online commerce because, today, due to complexities of entry tax and other processes, some states customers can not order everything from online shopping destinations,” Vijay Shekar Sharma, CEO of Paytm said.

Entry taxes for ecommerce companies has been spreading to different states with Madhya Pradesh being the latest to impose a 6% tax on goods coming in from other states which were ordered online. Uttar Pradesh, Assam, Odisha, Uttarakhand, Rajasthan, West Bengal, and Mizoram also levied the tax citing loss of revenues.

In June, Amazon challenged the ecommerce tax in Gujarat and filed a case in the high court against the state and the commissioner of tax. Flipkart has sued the Uttarakhand and Gujarat government over the entry taxes into the respective states.

2. Increase in administrative costs: Since the GST is a destination tax, the compliance onus will be the ecommerce companies and not on sellers, as indicated by this Firstpost report. Sharma also acknowledged that there will be short-term pains in terms of additional costs.

A major pain point which could emerge would be tax collection at source which may create a issuesd between sellers and ecommerce companies, as pointed out by Business Standard. According to the GST Bill, every operator will furnish an electronic statement of all amounts collected towards outward supplies of goods and services during a month. E-tailers would be required to adopt a new model where the state where the package is delivered gets the tax for the sale and not from where the order is booked from.

For example, if a customer books an order in Maharashtra and asks for it to be delivered in Bangalore, ecommerce comapnies should ensure that Karnataka’s tax must be applied and not Maharashtra’s.

This would necessitate ecommerce companies to change their ERP systems to accommodate the GST.

3. Logistics inefficiencies will reduce: A PriceWaterhouseCooper’s report says that downtime for  vehicles in logistics will reduce as the GST will do away with filing of waybills, entry permits and compliances under entry local tax laws. “Under the GST regime, the interstate movement of goods will be subject to IGST, wherein all movements will be ‘tax paid’,” the report says. It will also have an audit train of the movement of goods across state boundaries. “This will lead to optimisation of delivery schedules and the operational costs of transporters, resulting in competitive pricing,” it adds.

Read more: GST will complicate tax for online marketplaces, hurt platforms by removing safe harbor