India’s GST Council is set to consider a package of reforms this week that could ease compliance burdens for small online merchants, protect genuine buyers’ tax credits, and streamline dispute resolution, signalling a shift towards more technology-driven tax enforcement.
India’s GST Council is expected to consider a package of compliance reforms this week that could ease the burden on small e-commerce sellers, protect honest buyers from losing tax credit because of a supplier’s default and curb minor disputes that clog the system, according to reporting by PTI and other Indian business outlets.
Among the most closely watched proposals is a plan that would let small merchants selling through online platforms use an e-commerce warehouse as their registered place of business in states where they do not maintain their own premises. Under the proposed framework, a seller would need to establish a genuine base in one state, complete physical verification and Aadhaar authentication there, and then secure registrations in other states with the platform’s consent and without further direct involvement from tax officials, PTI reported. Moneycontrol and NDTV Profit said the idea is aimed at reducing the compliance load on small businesses that currently have to navigate multiple state registrations if they sell nationwide.
The reforms are also expected to address one of the most contentious areas in GST: input tax credit, or ITC, the mechanism that allows businesses to offset taxes paid on purchases against their own tax liability. According to PTI, the Council may consider a safeguard under which genuine buyers would keep their ITC even if an upstream supplier fails to pay tax, with recovery instead pursued against the defaulting seller. That change would be intended to reduce litigation and uncertainty for companies buying from small or new vendors, which have often been caught up in disputes over supplier non-compliance.
A further set of proposals would target low-value disputes and routine procedural friction. PTI said the Council may bar notices where the tax demand is below Rs 10,000, a threshold that officials believe covers a large share of cases by number but very little tax revenue. For higher demands, taxpayers would first receive an intimation and an opportunity to respond before a formal notice is issued. The package also appears to include more standardised rules for notice drafting, hearings and orders, as well as a redesign of registration and return filing so applications can be completed more easily the first time, with tailored document lists, simpler annual returns and a quarterly payment option for small businesses that sell only to consumers.
The likely changes come under the government’s broader GST 2.0 reform effort, which sources told PTI has been shaped through repeated meetings between central and state tax officials over the past year. Other reported proposals include tighter, intelligence-led checks on goods in transit, which would limit vehicle stoppages to cases authorised in advance by senior officers, and a possible single 5% GST rate without input tax credit for delivery services tied to e-commerce orders. Rajat Mohan of AMRG Global told PTI the package would reflect a shift away from restrictive procedures towards a system built more on seamless credit, cash-flow efficiency and technology-led enforcement.
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