Financial stability is one of the most important things in this 21st-century. A person who is doing a job or earning good also goes for the second income source and most of the online platforms do the work for them.
But doing something on an online platform or selling something on an online platform is not as easy as it seems.
For selling products online you have to register with that online platform with your proper documents and certifications. And one of the most important certificates is the (Goods & Service Tax) GST No.
Now what if you don’t have GST No.?
This article gives you all the information about GST No. and the issues and other information about how to do business online without owning GST No.
Exploring the Exemption Limit
The Indian government has provision for micro & small businesses. It allows them to operate without a GST registration no. until they reach a specified turnover. This can be advantageous for budding online entrepreneurs who are gradually scaling their operations.
Some products in India are exempted from the GST list. This means if you want to sell products online without GST then the products will have GST 0%. This means that these products are on the list of GST exemptions for online sellers. If you want to trade in those commodities then it is possible to sell products online without GST No.
The list of non-taxable goods includes:
- Natural products (milk products, honey, etc)
- Dry fruits
- Fresh vegetables
- Baked Foods
- Fabrics like jute, khadi, silk, etc
And few non-taxable services include:
- Services with no GST or 0% GST. (Non-taxable services are mentioned in the GST Act, Section 2(78)).
Platforms and Marketplaces for GST-exempt Sales
Going online and making business sounds so cool! But every opportunity comes with its own pros and cons. And online selling in India without GST No is one of those. While going for the online business you have to be very careful about selecting the right platform for your business.
Choosing the right e-commerce platform plays a pivotal role in simplifying tax compliance. Many leading online platforms in India have systems in place to assist sellers with tax-related matters.
These platforms often automatically calculate and collect GST on behalf of the sellers, easing the burden of individual tax management. There are few e- commerce platforms that help sellers to sell their products online without GST number in India and these are:
|Name of E-commerce platforms
Apart from the e-commerce sites mentioned above you can also use the following methods to sell products online without a GST number in India:
|By producing your site
|By using social media platforms
While going online and opting for the platform you have to very carefully review their policies and procedures related to the GST. You have to ensure that the platform’s policies are aligned with your business model and provide the necessary support for sellers operating below the GST threshold for GST-free online sales in India.
Navigating the Legal Requirements
Every law operates with its legal support and GST is not an exception to that:
- State-specific considerations: India’s federal structure means that the state-specific regulations can impact your business. States have the authority to set their GST threshold. Also, some states have their own unique rules regarding GST.
It is crucial to be aware of state-specific considerations to avoid any legal implications. Regularly monitor and update the GST council and relevant state authorities to stay informed about any changes in regulations.
- Transparent communication with customers: Building trust with your customers is paramount. If your business operates below the GST threshold or deals with the GST exempted products, communicate this information transparently.
You have to clearly state on your website and invoices that your business is not registered for GST or that your products fall into GST–exempt categories. Honest communication helps in managing customers’ expectations and fosters a positive relationship.
- Record keeping and financial compliances: Even if your business is not obligated to have a GST number, maintaining a meticulous financial record is imperative. Keep track of sales, expenses, and other financial transactions. This not only aids in managing your business but also serves as a record for potential audits or assessments in the future.
- Challenges and risks: While selling goods online without a GST registration is feasible, it comes with its set of challenges and risks. Non-compliance with tax regulations can lead to legal consequences including penalties and fines.
As the regulatory landscape evolves, staying abreast of changes becomes crucial to ensure ongoing compliance.
Strategies for Selling Products Without a GST Number
Following are some strategies by which you can sell your product online without a GST number:
|Small-scale and local sales
|Target a niche-specific market or focus on local sales where GST requirements might not apply to small businesses.
|Craft or artisan product
|Emphasize the handmade or artisanal qualities of your products as some jurisdictions may have exemptions for such businesses.
|Clearly communicate to your customers that your business operates within the legal limits and explain any applicable exemptions or thresholds.
|Limited products range
|Offer a limited range of products to stay below the threshold that would affect GST regulation.
|Collaborate with resellers
|Partner with resellers or third-party platforms that handle tax matters. It allows you to focus on product creation and sales.
|Service Based Offerings
|If feasible, shift towards offering services rather than tangible goods, as service-based businesses may have different tax requirements.
|Keep abreast of tax regulations. Because they are updated from time to time. Always stay prepared to adapt to your strategy accordingly.
All these strategies should be approached with caution. And to consult with a tax professional to ensure compliance with local laws and regulations.
Understanding the Future Landscape
The e-commerce landscape and tax regulations are subject to change. As your online business grows, reassess your tax obligation periodically. If your turnover approaches the GST threshold consider obtaining a GST registration proactively to avoid any disruptions in your operations.
Seek professional advice from a tax consultant who can provide valuable insights into your specific business needs.
While keeping in mind all the above discussion it is concluded that selling goods online without GST registration in India requires a nuanced understanding of the GST frameworks, state-specific regulations, and proactive compliance measures.
By staying informed, leveraging e-commerce platforms wisely, and maintaining transparent communications, entrepreneurs can navigate the intricacies of tax regulations while focusing on growing their online ventures.
We all know that the e-commerce ecosystem continues to evolve, adapting to changes and ensuring compliance will be key to long-term success in online platforms and obviously in business.
Q1. What is GST in simple words?
GST, or Goods and Services Tax. It is an indirect tax imposed on the supply of goods and services. It is a multi-stage, destination-oriented tax imposed on every value addition, replacing multiple indirect taxes, including VAT, excise duty, service taxes, etc.
Q2. What are the types of GST in India?
There are Four Different Types of GST Tax in India:
Q3. Why is GST used?
One Nation, One Tax: GST replaced multiple indirect taxes levied by the Central and State Governments, such as excise duty, service tax, value-added tax (VAT), and others. It brought uniformity in the tax structure across India, by eliminating the cascading effect of taxes.
Q4. What are the 5 slabs of GST?
The GST rates slabs from the GST council consist of NIL (0%), 5%, 12%, 18%, and 28% rates on different services.
Q5. Is it legal to sell products online without a GST number in India?
Yes, it is legal to sell products online without a GST number in India provided the products you choose for online selling are in the 0% GST tax slab means products have zero GST applied.
Q6. Who is responsible for paying GST? Or Who is liable to pay GST?
In general, the supplier of goods or services is liable to pay GST. However, in specified cases like imports and other notified supplies, the liability may be cast on the recipient under the reverse charge mechanism.
Q7. What are the consequences of not having a GST number for online sales in India?
You cannot sell taxable products online without a GST number. It shall be an offence and you have to face punishment or penalty for that.
Q8. Are there any exemptions or thresholds for small businesses regarding GST registration in India? What is the GST exemption limit for online sellers?
Effective from October 1, 2023, the limit for normal category states was increased from Rs. 20 lakhs to Rs. 40 lakhs. Special category states, such as Jammu and Kashmir, Uttarakhand, Himachal Pradesh, and the Northeastern states, retain the limit of Rs.10 lakhs.
Q9. Are there specific product categories or industries exempt from GST registration in India? What are the criteria for GST exemption?
40 lakhs is recognized as a GST-exempt business. Businesses that have a lower annual aggregate turnover than Rs. 1.5 crores can avail of a composition scheme under GST. The scheme allows individuals to pay taxes at a fixed rate depending on the turnover amount.
Q10. Can I sell handmade or artisanal products without a GST number in India?
Yes, you can sell handmade or artisanal products online without a GST number as it is exempted from the tax slab or included in the list of 0% of the GST tax slab.