Government has officially announced that the GST bill is going to be released on 1st of July 2017. So the e-commerce retailers are trying their best to finish their pending stock of roll out Goods, as less than a week left for the commencement of bill. They are luring in customers by giving discount offers ranging from 25 per cent to 90 per cent.
But that thing is going to change after 1st July 2017 as when the GST comes into force. Most of your online shopping will get expensive after the GST. And all the offers and discounts which online shopping sites are providing will be reduced to a much extent.
The reasons how it will effect the online shopping are as following:
- The Tax will be collected at source
Currently, e-commerce websites do not collect tax in any form. Under the GST, they will collect tax at a fixed rate of 1 per cent while paying to the sellers listed on their websites. Which will impact the prices of the products and will make your online shopping product more expensive. So step to a change is taken by the government which will come into force a later date.
- Faster delivery of Products
Your goods will reach you faster as the retailers will not have to file a separate paperwork for each state, under GST. Currently, for example, if your seller is in Kolkata and you are based in Delhi, your seller will file a separate bill for logistics, another one for the state tax, etc. Under the GST, the extra paperwork imposed by states will end and make deliveries faster.
- Diminishing of freebies and discounts?
Now a days in online shopping customers care getting upto 90% of discount. This offerings of mega discounts and freebies? May not be there in future because they will add an additional tax. Also, since an e-commerce company will have to pay the tax on the price it has purchased the goods from the supplier, it will not be worth its while to offer discount in many cases.
- Shopping from the global seller
If you shop from portals like Amazon.com and Ebay.com, they transact in foreign currency. The government has yet to come up with clarification of rules for such operators.
- You will face difficulties while Returning and cancellations E-commerce companies have a return or cancellation rate of nearly 18%. While collecting tax at source, e-commerce companies will have to bear the tax amount on their own and only later get refund from the government in case of returns and cancellations. The companies will face a major cash-flow disadvantage due to returns and cancellations. Returns and cancellations are going to face challenges.