GST authorities are considering mechanisms to address taxation and registration issues related to shared warehouses managed by e-commerce companies where multiple suppliers store goods for last-mile delivery, officials said. .
The issue of taxation of warehouses surfaced after multiple suppliers geo-tagged the same warehouse as an “additional establishment” under Goods and Services Tax (GST) rules.
“We are considering whether we can introduce the concept of 'shared workplace' or 'co-working space' in warehouses managed by e-commerce companies to store goods from multiple suppliers,” the official said. Ta. P.T.I..
Under the Goods and Services Tax (GST) law, suppliers of e-commerce platforms can store goods in a common warehouse. However, the supplier will need to show the warehouse as an additional establishment on her GST registration.
The official said that when multiple taxpayers register at a single warehouse, the geographic tag will reflect the same address for everyone. This sends a signal to the tax official that a large number of taxpayers are based in her one location and this may be a fraudulent registration.
“Another issue is that a warehouse where multiple suppliers store goods should not be held liable for the default of a single supplier. It is the responsibility of the e-commerce operators themselves and may affect their business,” the official added.
The issue of registration of warehouses maintained by e-commerce companies was discussed between central and state GST officials in a meeting earlier this month.
“It is currently in the discussion stage. Whether the concept of shared workplace can be introduced in e-commerce warehouses will be discussed in the Law Commission, after which it will be submitted to the GST Council,” the official said. .
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The Law Commission under the GST Council comprises central and state tax officials.
The evolution of e-commerce has meant that many companies need to maintain shared warehouses for multiple suppliers, with some facilities able to accommodate thousands of suppliers, said Rajat Mohan, executive director at Moore Singhi. He said it had become.
The GST authorities recently introduced geo-tagging, making it mandatory for taxpayers to provide geo-tags to all registered establishments. This allows tax officials to pinpoint the exact location of registered taxpayers.
“Situations in which multiple taxpayers list the same address can result in undue scrutiny of both the taxpayers operating within these warehouses and the companies that manage them. This is a critical issue that requires resolution,” Mohan said.
He said the GST authorities should consider putting in place a mechanism to identify warehouses separately and discipline the tax system to avoid confusing the tax scores of these establishments with those of the suppliers registered there. .
“A sophisticated tax system should enable geotagging to clearly represent warehouses and individual taxpayers, facilitating more accurate risk assessments by tax officials and minimizing undue harassment.” Mohan added.
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