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How will GST prove to be a beneficial upshot for B2B E-commerce?

Goods and services tax, or what we are more familiar with, GST, is one of the most crucial tax reforms ever implemented in India. Though it was in pipeline since quite a sometime, it finally fell into place on 1st of July 2017. It is anticipated that GST, in addition to deciphering the indirect taxation system, will have an accelerating impact on India’s economy.

Every enterprise, from the hulking multi nationals to the humble startups, was desperately waiting for the GST roll out. The new tax regime being comprehensive in nature is bound to have a positive impact on every sector of the trade industry. Furthermore, B2B e commerce is perceived to benefit the most.

How will it benefit E-commerce Industry?

The implementation of GST will certainly prove to be a beneficial upshot for the e-commerce sector, pertaining to the fact that it will be applicable across all Indian states, taking into account the sales, manufacturing and the consumption of goods and services, converting the nation into a unified tax market, primarily suitable for the E-commerce industry.

GST is said to replace a number of indirect taxes, for instance, central VAT, central sales tax and central excise duty to name a few. The stamping out of these taxes will result in a dramatic reduction in compliance cost, facilitating seamless trade between industries and, ultimately optimizing B2B e commerce operations.

Previously, there was not any specific tax law, which could regulate the E-commerce industry in India; this led to a plethora of complexities in compliance of various applicable laws in different states. However, with GST in place, E-commerce companies will not have to deal with the complications of individual state tax laws. The tax distribution in the country is actually being streamlined, post GST rollout.

In Addition, the introduction of GST will also simplify the logistics decisions as currently the B2B e commerce industries are encapsulated by the individual state tax constraints, which means that they need to concentrate more upon sourcing and warehousing based on tax implications, rather than convenience, distance or other strategic considerations.

However, Post GST, companies can frankly have fewer, larger warehouses located strategically, to reduce and simplify the operating costs of logistics.

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