Update: Amazon told MediaNama that this decision “will benefit small businesses since they don’t have to deal with pressures of cash flow at a time when they are transitioning into a new tax regime.”

Flipkart declined to comment regarding this.

Earlier: The government has temporarily put on hold the implementation of Section 52 of the Goods and Services Tax Act, 2017, which required e-commerce marketplaces like Amazon India and Flipkart to collect up to 1% tax on all sales made by online sellers on the platform. The government said the decision was made based on “the feedback received from the trade and industry.” The government also said that the date when this will be enforced will be communicated later, but didn’t provide an indication regarding when that might be.

Persons who will be liable to deduct or collect tax at source will be required to take registration, but the liability to deduct or collect tax will arise from the date the respective sections are brought in force.

There was some fear among e-commerce marketplaces that they might lose sellers on their respective platforms if the July 1 deadline was strictly adhered to.

We’ve written to both Amazon India and Flipkart to find out what were some of the issues sellers on their platforms were facing and how this relaxation of norms will benefit them. We will update the story once we hear back.

There is some good news for the sellers as well: they will not have to register immediately for GST, at least not “till the provision of Tax Collection at Source is brought under force.” However, if they’re “liable under Section 22 or any other category specified under Section 24” of the GST Act, then they will have to register right away.

Section 52 of the GST Act, 2017 says:

52. (1) Notwithstanding anything to the contrary contained in this Act, every electronic commerce operator (hereafter in this section referred to as the “operator”), not being an agent, shall collect an amount calculated at such rate not exceeding one per cent., as may be notified by the Government on the recommendations of the Council, of the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator.

Last week, Amazon India tied-up with ClearTax to offer the GST software to sellers on its platform to help them become compliant with all the new tax return norms. While, back in February, Flipkart had said that it would be providing tools to its sellers to be GST compliant.

Online GST registration began on June 25, but on Day One there were several reports of traders and small businesses facing technical glitches on the site.

Also Read: Thoughts On How GST Would Impact e-commerce In India