The GST Council is considering procedural changes to simplify compliance for small online merchants, including platform-based registration, dispute reduction measures, and automation reforms, as part of a broader push for a more trust-based tax system.
The GST Council is set to examine a broad package of procedural changes that could ease compliance for small businesses, especially those selling through online marketplaces, as the government pushes ahead with a more trust-based version of the tax system. According to the Economic Times, the proposals under discussion would let small e-commerce merchants use platform-run warehouses as their registered business address in states where they have no physical office, while also reducing disputes over input tax credit and cutting down on low-value tax notices.
If approved, the warehouse registration proposal would be a significant shift for sellers that currently struggle to meet the state-by-state registration requirements linked to inventory storage and fulfilment. The plan, as described in the report, would require physical verification and Aadhaar authentication in the seller’s home state before additional registrations could be obtained through the platform’s consent, avoiding repeated dealings with local tax offices. Industry sources cited by the newspaper said the change could help about 9.5 lakh small sellers expand nationally without opening separate premises in every state where they hold stock.
The Council is also expected to weigh a change that would protect genuine buyers from losing input tax credit simply because a supplier further up the chain failed to deposit the tax. Under that approach, recovery action would be aimed at the non-compliant seller rather than the buyer with a valid invoice. That would remove a persistent source of uncertainty for companies that buy from smaller or newer suppliers, and it would align with a broader push to separate honest commercial error from deliberate evasion. Ahead of the meeting, finance minister Nirmala Sitharaman said the Council would consider process reforms, though no blanket relief for online sellers had been formally announced, according to reporting on the planned October 7 session.
A tougher threshold for litigation is also on the table. The Economic Times said officials are considering blocking GST demand notices for amounts below Rs 10,000, on the grounds that such cases make up a large share of disputes but contribute little revenue. For larger demands, tax officers would first have to issue an intimation and allow a response before proceeding with a formal notice. The proposed framework would also standardise how notices are drafted, how hearings are handled and how decisions are recorded, with a distinction between fraud and simple underpayment. In cases settled without litigation, the amount paid would be treated as a charge rather than a penalty.
The reform package is not limited to enforcement. The GST registration process itself is being redesigned so that businesses can submit cleaner applications on the first attempt, with the system guiding users through only the relevant fields and auto-filling details from existing registrations in other states. The plan would also assign tax jurisdiction automatically based on the business address and could eventually support simpler annual returns and quarterly payment options for consumer-facing small and medium-sized enterprises. Other measures under consideration include tighter, intelligence-led checks on vehicle movement in transit and, separately, a possible flat 5% GST on delivery charges for goods bought through e-commerce platforms, without input tax credit. After years of experience with the tax, advisers quoted by the newspaper said the direction of travel now appears to be towards easier compliance, greater certainty and more technology-led enforcement than the system initially allowed.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
