Selling Goods Online in India: Understanding When GST Registration Isn't Required

In India, companies typically require a Goods and Services Tax (GST) identification number if their yearly revenue surpasses INR 40 Lakhs. Nevertheless, there are ongoing discussions to permit online merchants with turnovers below this limit to operate without mandatory GST registration. This article delves into the specifics of selling items online in India without a GST number and outlines the products and services that are exempt from GST regulations.

Circumstances Not Requiring GST Registration

While GST registration is generally compulsory for suppliers of goods and services, certain exceptions exist. These situations include:

• Businesses selling goods with an annual cumulative turnover below INR 40 Lakhs (or INR 20 Lakhs for specific hilly and northeastern states) (details).
• Service providers whose yearly aggregate turnover is under INR 20 Lakhs (or INR 10 Lakhs for designated hilly and northeastern regions) (details).
• Organizations exclusively involved in the trade and distribution of agricultural goods.
• Taxpayers who do not supply either goods or services.
• Companies that offer non-taxable goods or provide GST-exempt services.

Selling Online via E-commerce Platforms Without GST Registration

Indeed, businesses can conduct online sales through e-commerce platforms without needing GST registration, provided specific criteria are met. During the 48th GST Council Meeting, a provisional decision was made, effective from October 1, 2023, allowing vendors to sell products on e-commerce sites without GST registration, subject to these requirements:

• The cumulative all-India turnover must not surpass the prescribed threshold.
• The individual should not be involved in making taxable interstate supplies.

Goods Permitted for Sale Without GST Registration

The following items can be sold by businesses without requiring GST registration:

• Common vegetables such as potatoes, onions, ginger, and garlic.
• Fresh fish, eggs, milk, and other related food products.
• Various fruits, including grapes and melons.
• Unroasted coffee beans and unprocessed green tea leaves.
• Unpacked food items not sold in branded containers, such as rice, wheat, and cereals.
• Fabrics like raw silk, khadi fiber, and unspun jute fiber.
• Raw materials used for chalks, slates, hearing aids, and handloom products.

It is important to note that certain items from this list may become subject to GST once they undergo processing.

Services Exempted from GST

Below is a compilation of services that are exempt from GST:

• Cultivation, harvesting, packing, and storage activities related to agricultural produce.
• Services involving the supply and leasing of machinery specifically for agricultural purposes.
• Transportation services, including public transit, auto-rickshaws, metered cabs, and metro systems.
• Transportation of goods where the fee is lower than INR 1500.
• Diplomatic and government services rendered in other countries.
• Services provided by regulatory bodies such as RBI, IRDAI, Central and State Governments, and NPS.
• Healthcare services, including mid-day meal catering, veterinary clinics, and paramedics.
• Ambulance and charitable services.
• Educational services, which also encompass mid-day meal catering and paramedics.
• Basic Saving Bank Deposit (BSBD) banking services offered under the Pradhan Mantri Jan-Dhan Yojana.
• Services associated with religious events, sports organizations, tour guides, and libraries.
• Retail packaging, pre-conditioning, and waxing services.

Steps to Sell Online Without GST Registration

To sell products online without a GST registration, follow these steps:

1. Identify and choose a product or service that is exempt from GST.
2. Select a suitable online marketplace for selling, such as eBay or Flipkart.
3. Proceed to create a seller account on the chosen platform.
4. Develop and publish a product listing for your items.
5. Utilize an online payment processor, such as PayPal or Razorpay, to manage transactions.
6. Arrange for courier services, like USPS or FedEx, to deliver merchandise to customers.
7. Address customer service inquiries through your seller central dashboard.
8. Implement branding and marketing strategies to promote your goods.

Frequently Asked Questions

• What is GST and its primary purpose in India? GST, or Goods and Services Tax, is an indirect tax levied on the supply of goods and services in India, aiming to streamline the previous complex tax structure into a single, comprehensive tax.

• How many different types of GST are applicable in India? India's GST system includes four main types: Central GST (CGST), State GST (SGST), Integrated GST (IGST), and Union Territory GST (UTGST).

• What is the current threshold for mandatory GST registration for businesses? The threshold for mandatory GST registration is generally an annual aggregate turnover of INR 40 Lakhs for goods and INR 20 Lakhs for services, with lower limits for specific states.

• Can a small business choose to register for GST even if not mandatory? Yes, businesses whose turnover is below the mandatory threshold can opt for voluntary GST registration to claim Input Tax Credit and enhance credibility.

• What advantages does GST registration offer to a business? GST registration allows businesses to legally collect GST from customers, claim Input Tax Credit on purchases, expand operations across states, and improve overall business transparency and compliance.