Unregistered Taxpayer and Composition suppliers allowed to supply their products through E-commerce Platform
Finance Minister Nirmala Sitaraman presented union budget 2023 in parliament in 1st February 2023, wherein so many changes are proposed under direct tax and indirect tax.
One of the most awaited proposed in union budget to allow unregistered person and composition dealer to supply their products through e-commerce platform. This proposal can benefit number of small trader and business entities to who are unregistered under GST or their aggregate turnover does not exceeding the threshold limit to get registered under GST.
Presently e-commerce operators do not allow the listing of business on its platform if the supplier does not hold GST registration. So if any trader wishes to access the e-commerce platform they had to take GST even though threshold limit does not exceeds, and it was creating unnecessary extra burden on these small traders and vendors.
The proposal to allow unregistered supplier and composition supplier is made for the intra-state supplies, as the GST law mandate compulsory registration under GST for inter-state supply. Since the composition dealers also cannot make inter-state supplies, both Unregistered and composition suppliers allowed to list on e-commerce platform for Intra-State supplies only.
{Inter-state supply: refers to supply of goods or service made from on state to other states or union territories, similarly for Intra-state supply: refers to supply of goods or service within the states or Union Territory.}
To curb the inter-state supplies made through e-commerce platform by the Unregistered or composition supplier, the law provides additional reporting requirement on e-commerce platform fail to which attract penal provision on E-commerce Operators.
Section 122 of CGST act proposed to amend in this regard as following;
In section 122 of the Central Goods and Services Tax Act, after sub-section (1A), the following sub-section shall be inserted, namely:––
“(1B) Any electronic commerce operator who––
- allows a supply of goods or services or both through it by an unregistered person other than a person exempted from registration by a notification issued under this Act to make such supply;
- allows an inter-State supply of goods or services or both through it by a person who is not eligible to make such inter-State supply; or
- fails to furnish the correct details in the statement to be furnished under sub-section (4) of section 52 of any outward supply of goods effected through it by a person exempted from obtaining registration under this Act,
shall be liable to pay a penalty of ten thousand rupees, or an amount equivalent to the amount of tax involved had such supply been made by a registered person other than a person paying tax under section 10, whichever is higher.”.