Lok Sabha Question No. 1220 (UNSTARRED), answered on 2023-12-11
Subject: Dropout Rate of MSMEs doing Business through E-Commerce Platforms
Ministry: FINANCE
Asked by: Srinivas Kesineni

Government of India Ministry of Finance Department of Revenue

## LOK SABHA

## UN-STARRED QUESTION NO. 1220

TO BE ANSWERED ON MONDAY, DECEMBER 11, 2023 Agrahayana 20, 1945 (Saka)

## DROPOUT RATE OF MSMEs DOING BUSINESS THROUGH E-COMMERCE PLATFORMS

## 1220. SHRI KESINENI SRINIVAS:

Will the Minister of FINANCE be pleased to state:

(a) whether the Government has taken note that MSMEs doing business through e-commerce platforms have a high dropout rate of 60 to 70 per cent and if so, the details thereof;

(b)  the  steps  taken/being  taken  by  the  Government  to  reduce  the  compliance  burden  for MSMEs without a Goods and Services Tax (GST) registration on e-commerce platforms;

(c)  whether  the  Government  is  considering  to  allow  unregistered  MSMEs  below  a  certain turnover threshold to conduct inter-state transactions;

(d) if so, the details thereof;

(e)  whether  the  Government  is  considering  permitting  a  single  Virtual  Place  of  Business registration in lieu of a mandatory Principle Place of Business registration in every State where taxable supplies are made; and

(f) if so, the details thereof?

## ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a): The  Ministry  of  Micro,  Small  &  Medium  Enterprises  has  not  received  any  such information.

(b): The  requirement  of  mandatory  registration  for  intra-state  supply  of  goods  through  ecommerce operators (ECOs) has been conditionally waived off with effect from 01.10.2023. Composition  taxpayers  have  also  been  allowed  to  make  intra-State  supply  through  ECOs subject to certain conditions with effect from 01.10.2023.

(c) to (d): As per provisions of existing law, GST registration is mandatory for making interstate supplies. GST law is amended with recommendation of the GST Council. The Council has not made any recommendation to amend this provision.

(e) to (f): Considering the special nature of e-Commerce operators, a simplified procedure for registration  of  e-Commerce operators has already  been notified.  It  provides  that  when  an  eCommerce operator applies for registration in a particular State or Union Territory where he does  not  have  a  physical  presence,  he  can  apply  for  registration  by  giving  details  of  the principal place of business located in another State or Union Territory. Further, the following amendments have been made in GST Rules to strengthen the registration process. i.  Biometric-based  Aadhaar  authentication  would  be  done  for  applicants  seeking  GST registration who have opted for authentication of Aadhaar number and have been identified as high risk, along with the verification of the original copy of the documents uploaded with the application at one of the Facilitation Centers notified for the purpose. A Pilot project for this was  launched  in  the  State  of  Gujarat.  Further,  in  July  2023,  the  said  Pilot  project  has  been extended to the State of Puducherry and in November, 2023, extended to the State of Andhra Pradesh.

ii.  Details  of  bank  account,  in  name  and  PAN  of  the  registered  person,  is  required  to  be furnished  within  30  days  of  grant  of  registration  or  before  filing  of  statement  of  outward supply, whichever is earlier. The registration in respect of such registered persons who do not furnish the details of valid bank account within the time period prescribed would be suspended automatically by the system.  However, upon compliance with this provision subsequently, by the registered persons such system based suspension would be automatically revoked by the system.

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