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Small Online Retailers to be Soon Exempted from the Indirect Tax Registration

Seep Gupta
Seep Gupta at March 06, 2023

Small Online Retailers Exemption 

The discussions are going on between the central and state governments to exempt small online retailers with lesser turnover from the mandatory GST registration. This move could boost the reach of small enterprises via e-commerce websites. Currently, all online retailers are required to register for Indirect Tax, irrespective of their turnover. The law committee of the GST council will examine the matter before taking any further and final decision.

Need for the Exemption

This is needed to expand the customer base of the online retailers and to remove the disparity between online and offline retailers and sellers when it comes to GST registration. Mandatory GST registration for online retailers prevents them to achieve a larger customer base and expanding their business. Offline retailers are only required to register for GST if their annual turnover is more than 40 lakhs.

Expected Proposals in the next meeting of the GST Council

In the next meeting of the GST council which will be held next month, the GST council may consider a proposal to apply fiver percent of the slab by moving some of the mass consumption products to three percent and the remaining goods to eight percent categories. The council can also put forward a proposal of moving some of the non-food items to a 3 percent slab.

The government is also planning to reduce the number of GST slabs from four to three. According to the reports, a new median slab of 15 percent may be introduced in place of 12 percent and 18 percent slabs. The five percent of the GST slab might be replaced by 6 or 7 percent of the GST slab. However, the point is the rate tweaking will be done in such a manner that not more than four GST slabs will be created.


Currently, the GST system has four slabs. 5 per cent, 12 per cent, 18 per cent and 28 per cent. There is a total of 480 items under 18 percent of the slab, which contributes to 70 % of the GST collection. Apart from this, there is a separate list of unbranded and unpacked food items which do not levy any GST.

The council is also seeking to increase the GST rates on 143 items including chewing gums, perfumes, chocolates, apparel, clothing brands etc. 

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