New GST Clarifications Issued for Online Sellers
A summary of GST notifications from January 2026 provides fresh guidance for vendors operating on digital platforms. The updates include clarifications on the tax implications for marketplace transactions and documentation requirements, particularly for businesses onboarding to networks like ONDC.
- A key clarification allows small vendors with an annual turnover of up to ₹40 lakh for goods and ₹20 lakh for services to make intra-state sales through e-commerce platforms without needing GST registration. This significantly lowers the barrier to entry for local artisans and pop-up sellers looking to join digital networks. - For vendors participating in temporary exhibitions or pop-up events in a state where they don't have a permanent place of business, the "casual taxable person" registration under GST is applicable. This special registration is valid for up to 90 days, with a possible extension, and requires an advance deposit of the estimated GST liability. - As the marketplace operator, FAIRETAIL is responsible for deducting 1% Tax Collected at Source (TCS) from the net value of sales for all registered vendors transacting on its platform. This amount is deposited with the government and can be claimed as a credit by the vendors when filing their returns. - The clarifications reinforce the marketplace's role in compliance, especially when onboarding sellers through networks like ONDC. In transactions involving multiple platforms (a buyer app and a seller app), the responsibility for TCS compliance falls on the platform that makes the final payment to the seller. - Recent GST rate rationalization has been beneficial for many vendors in the handicraft sector, a key segment for pop-up markets. GST on a wide range of handicraft items has been reduced to 5%, with some items like handmade imitation jewelry attracting a lower rate of 3%. - For event-based sellers who are already registered under GST in the state where the pop-up is held, no separate registration is needed; they can add the exhibition location as an "additional place of business" to their existing GSTIN. - The government's push for ONDC aims to democratize e-commerce by creating an open network, which is particularly beneficial for hyperlocal and small-scale sellers in Tier 2 and Tier 3 cities, preventing dependency on single large platforms.
