Deliveries of goods ordered or supplied through e-commerce platforms will attract 5 per cent Goods and Services Tax (GST), irrespective of the mode of transportation, according to government sources.
The clarification follows the recommendations made at the 57th meeting of the GST Council on October 8, which proposed a uniform tax treatment for e-commerce delivery services to remove ambiguity in the existing framework. The proposed levy will apply without the benefit of input tax credit (ITC).
The move is significant for the rapidly expanding e-commerce and quick-commerce sectors, where goods are transported through multiple channels, including road transport, goods transport agencies (GTAs) and other delivery networks.
Earlier, certain transportation services provided by GTAs were exempt from GST when goods were transported to unregistered persons. Under the proposed changes, this exemption would no longer apply when the transportation relates to goods ordered or supplied through an e-commerce platform.
Government sources clarified that the 5 per cent GST rate would apply to e-commerce deliveries across different modes of transportation, bringing greater consistency to the tax treatment of such services.
Which e-commerce delivery services will attract 5% GST?
The GST Council has proposed a 5 per cent tax rate without input tax credit on delivery services relating to goods supplied or ordered through an electronic commerce operator (ECO).
The proposal also covers delivery services, other than courier and postal services, supplied through an e-commerce platform when the delivery service provider is not required to register under the relevant GST provisions.
In such cases, the e-commerce operator will be responsible for paying the GST under Section 9(5) of the Central Goods and Services Tax (CGST) Act, 2017.
Where the delivery service provider is liable to register for GST, the tax will be payable by the provider under the applicable provisions.
The Council has also proposed withdrawing the existing exemption for GTA services involving the transportation of goods to unregistered persons when those goods are ordered or supplied through an e-commerce platform.
Why has the GST Council proposed the change?
The proposed changes seek to remove inconsistencies in the tax treatment of e-commerce deliveries, particularly where the mode of transportation or the contractual arrangement differs.
The growing use of online marketplaces, quick-commerce platforms and third-party logistics providers has created a complex delivery ecosystem. Different interpretations of existing GST provisions have also contributed to uncertainty over the tax applicable to certain services.
By prescribing a uniform rate for qualifying e-commerce delivery services, the Council aims to simplify compliance and bring greater clarity for platforms, logistics companies and delivery service providers.
The Council’s recommendations form part of a wider package of GST process reforms aimed at simplifying compliance, easing operational burdens and improving the functioning of the indirect tax system.
Will online shopping become more expensive?
The proposed 5 per cent GST could affect the cost of delivering goods ordered through e-commerce platforms. However, the final impact on consumers will depend on how businesses account for the tax and whether any additional costs are passed on through delivery charges or product prices.
The absence of input tax credit under the proposed rate means eligible businesses cannot claim credit for GST paid on their inputs against this output tax. This could influence the overall cost of providing delivery services.
While the uniform tax treatment is expected to reduce ambiguity for businesses, it does not automatically mean that every online order will become more expensive. The impact will vary depending on the delivery arrangement and the applicable tax provisions.
The GST Council has clarified that the latest meeting focused on process reforms and resolving ambiguities rather than introducing a broad revision of GST rates. The proposed changes to e-commerce deliveries are intended to standardise the tax treatment of services linked to online orders.