The government is considering a broad overhaul of the Goods and Services Tax framework for e-commerce platforms, exports of services and taxpayer compliance, with proposals aimed at making the system more uniform and reducing procedural hurdles, according to Finance Ministry sources.
One of the key proposals is to rationalise the GST treatment of services supplied through e-commerce platforms. Under the proposed framework, platforms may not be allowed to apply different tax treatment to the same service based on the commercial model or contractual arrangement through which it is delivered.
The tax applicable to a booking would instead depend on the nature of the service actually supplied, rather than the contractual structure adopted by the platform. In effect, the government is considering a “same delivery, same tax” approach, under which the same service would attract the same GST treatment irrespective of how it is routed or structured commercially.
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The move could bring greater consistency to GST treatment across e-commerce business models and address differences arising from the way platforms structure their contracts with service providers.
GST Push For Easier Service Exports
The government is also looking to ease the rules governing exports of services, with the proposed reforms aimed at removing ambiguity around the way Indian businesses bill overseas customers.
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Under the proposed framework, billing a foreign client through an overseas branch would not, by itself, affect the export status of services supplied by an Indian firm. The move could provide greater clarity to companies with international operations and reduce disputes over whether a transaction qualifies as an export of services under GST.
Faster Registrations, Refunds On Cards
The government is considering measures to make GST registrations and amendments more automated. According to Finance Ministry sources, 61% of GST registrations are already being granted automatically within three working days. The proposed changes could further reduce manual intervention, with 66% of applications for registration amendments expected to be processed without officer intervention.
The government is also looking to speed up GST refunds. Under the proposed framework, refund applications would be acknowledged within 10 days, while 90% of refunds could be released after a risk-based check.
Another proposal seeks to automatically restore GST registrations that have been suspended for procedural lapses once the taxpayer rectifies the lapse. This could reduce the compliance burden on businesses where the suspension is triggered by relatively minor procedural issues.
The government is also considering allowing small taxpayers who supply exclusively to consumers to file GST returns once a year. The move could significantly reduce the compliance burden for smaller businesses that have limited transaction complexity and do not supply to other registered businesses.
Taken together, the proposals signal a push towards a more automated and risk-based GST administration, with greater focus on uniform tax treatment, faster refunds and registrations, and lower compliance requirements for smaller taxpayers.
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