Some e-commerce, telecom, and insurance entities might escape the complex prerequisite of separate registration in each state under the proposed goods and services tax (GST) regime, with a leeway or scope for special provisions in the draft law.
“We have provided for an enabling provision under the draft law to provide certain companies with centralised registration. There is basically a section for special procedure for certain companies which want to undergo a simplified compliance and registration procedure. The categories will have to be negotiated with the states,” said an official. These will be part of the GST rules if approved.
He added that the intent was to make compliance simpler for these service providers and this would be addressed under the rules. The draft law says e-commerce companies, including Flipkart and Amazon, will be required to register in each state under the GST regime, as both central and state laws provide for the tax and also collect at source.
According to the draft law, an e-commerce operator is required to tax-collect at source one per cent of the net amount collected on behalf of the supplier of the good. However, it also provides a dispensation under which they may be exempted from registering in different states and to collect tax at one place.
The provision says the central government or a state may, on recommendation of the Council, specify the category of persons who may be exempted from registering. It also mentions that there may be special procedures for filing of return.
The draft has provided that the supplier would also be required to register under the GST law in that state irrespective of any exemption threshold limit. Firms with an annual turnover of up to Rs 20 lakh are to be exempt from GST.
“The states must realise that multiple registrations for e-commerce or telecom players might be unworkable, as compliance will be cumbersome. Besides, there might be lack of coordination within states, viewing the same transaction differently, further complicating it for these providers,” said Bipin Sapra of consultancy EY.
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