New Delhi, May 12 (Agency) Noting that only 10% of India’s small businesses sell online primarily due to complex GST compliance requirements, industry body Federation of Indian Micro Small & Medium Enterprises (FISME) has urged the government bring parity between offline and online sellers. FISME Secretary General Anil Bhardwaj said that digitally-enabled MSMEs have the potential to grow twice as fast as their offline counterparts. “There is a dire need to educate and encourage MSMEs to sell online, and spread awareness of the growth opportunities available through e-commerce platforms. It is crucial that efforts be made to simplify the GST system, rationalise rates, and harmonise GST thresholds between offline and online sellers,” he said on Thursday.
At present, it is mandatory for online businesses to register under GST regardless of turnover. However, for offline sellers, it only applies to businesses with a turnover of over Rs 40 lakhs. The trade body said that this creates an unequal playing field between offline and online retail. “Post the pandemic, smaller players and artisans are trying to sell their goods online but are finding GST compliances onerous. GST and other heavy compliance requirements for online sellers have discouraged small businesses from becoming a part of the digital economy,” it stated.
According to market intelligence and secondary research, it is estimated that about 5 crore MSMEs are unable to sell online due to complex and mandatory GST requirements. “MSMEs operating through online platforms are burdened with cumbersome and time-consuming periodical compliances like registration and filing monthly returns, which further dissuades them from registering under GSTN. Under the current framework, many small businesses may not be able to transition from conventional sales to e-commerce platforms because their GST registration under the composition scheme may not be adequate,” FISME said.