The GST Council has proposed a 5% Goods and Services Tax (GST) rate without input tax credit (ITC) on certain delivery services supplied through electronic commerce operators (ECOs). The proposal, discussed on October 8, could change how eligible delivery services booked through e-commerce platforms are taxed.
The proposed rate covers delivery services supplied through an ECO under Section 9(5) of the Central Goods and Services Tax (CGST) Act, where the person providing the service is not liable for GST registration under Section 2. Courier and postal services are excluded from the proposed category.
Proposed GST Rate Covers Platform-Based Deliveries
The proposal focuses on specified delivery services facilitated through e-commerce operators. Under the proposed framework, these services would attract GST at 5%, without the benefit of input tax credit.
Input tax credit allows eligible businesses to offset GST paid on business inputs against their tax liability. The proposed restriction means that providers covered by the measure would not be able to claim ITC on the specified services under this rate.
The scope of the proposal is tied to the conditions outlined under Section 9(5) of the CGST Act and the registration status of the service provider. It does not cover courier and postal services under the category described in the proposal.
Tax Treatment of E-Commerce Deliveries in Focus
The proposed measure brings the GST treatment of delivery services supplied through e-commerce platforms into focus. Digital platforms increasingly facilitate transactions and services across different modes of transport, making the applicable tax framework an important consideration for businesses operating in the sector.
The proposal specifically concerns eligible delivery services supplied through e-commerce operators. Its application will depend on the final provisions and the conditions governing the relevant services.
Proposal Awaits Further Implementation Details
The GST Council’s proposal signals a potential change in the tax treatment of specified platform-based delivery services. However, the precise implementation details and the final scope of the measure will be important in determining how it applies to e-commerce operators and service providers.
Until the proposal is formally implemented, the 5% rate should be understood as a proposed measure rather than a confirmed change already in force.
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