Small businesses in India want to sell online but are discouraged by the compliance burdens posed by mandatory GST registration, industry bodies Alliance of Digital India Foundation (ADIF), IndiaTech.org, and Nasscom said in separate letters sent to the government in March and April this year. The associations have asked the government to exempt small online sellers from GST registration similar to how small offline retailers are exempt. "Many small businesses moved online over time and found that selling online granted them access to consumers in different geographies, helped them scale and manage their cash flows and gave some degree of resilience to pandemic-related risks that involved lockdowns, market closures and reduced footfalls. But many of these businesses today face a regulatory challenge on going digital." – IndiaTech What does the CGST Act say? Threshold-based registration: According to Section 22 of the Central Goods and Services Act, 2017 (CGST Act) Act, every supplier is liable to be registered under the Act if their overall annual turnover is above the threshold of 40 lakhs in case of supply of goods and 20 lakhs in case of supply of services. Mandatory registration for e-commerce retailers: However, according to Section 24 of the Act, persons who supply goods and services through e-commerce operators are liable to compulsorily register under the CGST Act, irrespective of whether their turnover exceeds the above-mentioned threshold or not. Why is the requirement for online retailers burdensome? Increased cost for small businesses and dampening of digital growth: "These provisions have increased the overall cost and complexity…
