Union Budget 2023 to enable Intra-State Supplies by Composition Taxpayers and Unregistered Suppliers through E-Com Operators [Read Finance Bill]

The Finance Minister Nirmala Sitharaman has presented the Union Budget 2023, by the budget speech. The budget proposed minor changes to tax policies, allocation of government spending, and initiatives aimed at boosting the economy and addressing social issues. The budget is an important milestone for the central government, being the last full budget, in light of the upcoming election.

Some changes were proposed in the finance bill, to allow the composition taxpayers and unregistered suppliers to make intrastate supplies through E-Com Operators, which are to be introduced to the Goods and Services Tax Act.

As per the GST laws, the composition scheme is designed for small businesses with an annual turnover of up to Rs. 1.5 crore. Under this scheme, the taxpayers pay a fixed percentage of their turnover as GST instead of charging and collecting GST from their customers.

In the 47th GST Council Meeting, an in-principle approval had been granted for allowing unregistered suppliers and composition taxpayers to make intra-state supply of goods through E-Commerce Operators (ECOs), subject to certain conditions.

Clause 128 of the Bill sought to amend clause (d) of sub-section (2) and clause (c) of sub-section (2A) in section 10 of the Central Goods and Services Tax Act [Section 10(2A)(c) and Section 10(2)(d) of the CGST Act] so as to remove the restriction imposed on registered persons engaged in supplying goods through electronic commerce operators from opting to pay tax under the composition levy.

Additionally, Clause 138 of the Bill sought to insert a new sub-section (1B) in section 122 of the Central Goods and Services Tax Act so as to provide for penal provisions applicable to electronic commerce operators in case of contravention of provisions relating to supplies of goods or services made through them by unregistered persons or composition taxpayers.

The 48th Council Meeting held on 17.12.2022 had approved the amendments in the GST Act and GST Rules, along with issuance of relevant notifications, to enable the same.

Further, considering the time required for the  development of requisite functionality on the portal as well as for providing sufficient time for preparedness by the E-Commerce Operators,  the GST Council had recommended that the scheme may be implemented w.e.f. 01.10.2023.

To Read the full text of the Finance Bill 2023 CLICK HERE