New GST rules drop e-commerce delivery tax to 5% from November 1. The catch: platforms lose Input Tax Credit, impacting profitability for partners and operators. Nasscom wants regulators to defer implementation until January 2027, citing inadequate preparation time.
How We Got Here
The 57th GST Council recommendations in October laid the groundwork for these changes. Notification on October 27 gave companies just four days to overhaul their billing and accounting procedures.
The Numbers
- The GST rate on delivery services was previously 18% before the change to 5%.
- The 5% rate applies only if Input Tax Credit (ITC) is not claimed by the e-commerce operator.
- The revised GST entry expands coverage beyond "local deliveries" to all delivery services except postal and courier.
- E-commerce platforms must pay GST for deliveries made by unregistered partners under Section 9(5) of the CGST Act.
- Operators' profitability impact depends on their mix of registered and unregistered delivery partners.
What Happens Next
🇮🇳 Why This Matters for India
For gig workers and small delivery fleets in cities like Indore and Nagpur, losing ITC will mean lower payouts from platforms that absorb the non-creditable tax burden.
The Take
This is a compliance headache that will force platforms to choose between higher costs or tighter margins, likely passing some on to delivery partners. The move will accelerate platform efforts to onboard more registered delivery partners to offload GST liability directly.
Source:
MediaNama ↗