New Delhi: The GST Council is likely to discuss a series of process-related reforms on Wednesday aimed at making GST compliance simpler for businesses and reducing disputes with tax authorities. The proposed changes are part of the broader GST 2.0 reform process and could cover registration, return filing, movement of goods and input tax credit.
One of the key proposals under consideration is aimed at small sellers operating through e-commerce platforms. The plan could allow such businesses to use an e-commerce platform’s warehouse as their registered place of business in states where they do not maintain their own premises.
Under the proposed system, sellers would need to establish a genuine presence in at least one state, where physical verification and Aadhaar authentication could be completed. For registrations in other states, the warehouse address could potentially be used with the consent of the e-commerce platform, without requiring additional involvement from tax officials.
Around 9.5 Lakh Small Sellers Could Benefit
The proposed warehouse registration facility could help around 9.5 lakh small sellers expand their operations across the country without setting up separate offices in every state where their goods are stored.
The move could also help create a more level playing field among different e-commerce business models by reducing the compliance burden associated with maintaining multiple physical locations.
Another proposal likely to come up before the Council concerns input tax credit. Under the proposed mechanism, genuine buyers who hold valid invoices could retain their input tax credit even if the supplier fails to pay the applicable tax.
In such cases, recovery proceedings could instead be directed towards the supplier who defaulted on the tax payment. The proposal is intended to reduce uncertainty for businesses and address a significant source of GST-related litigation, particularly for companies dealing with smaller or newly established vendors.
Focus on Reducing Low-Value GST Disputes
The GST Council may also examine measures aimed at reducing the number of cases involving very small tax demands. One proposal is to prevent GST notices from being issued when the disputed tax amount is below ₹10,000.
According to the proposal, cases involving such small amounts account for around 20% of all GST disputes by number, even though the total tax involved in these matters is negligible.
If approved, the measure could reduce the administrative workload for both taxpayers and tax authorities while allowing the GST system to focus more attention on substantial tax disputes.
Disclaimer: The proposals mentioned in this article are based on information available ahead of the GST Council meeting and may change before any final decision is taken. Readers should refer to official government notifications for the final rules and applicable provisions.