New Delhi, May 18, 2017

Staring at an imminent Goods and Services Tax (GST) regime implementation, several players in e-commerce and logistics space such as Future Supply Chain Solutions, ShopClues, Flipkart have started asking their vendors and transporters many of who are small and medium players to take steps to be compliant.

However, they would like some loose ends such as how to deal with an e-way bill, in case there is a product return in e-commerce, to be tied-up.

No process is defined for handling return cargo in e-commerce for the e-way bills under GST.

Interestingly, some sectors do not want rates announced now, as lower costs might encourage customers to postpone sales. Pratik Jain, Partner and National Leader, Indirect Tax, PwC India, said that companies from sectors such as automobiles are saying don’t announce the rates now—if the rates are lower, then our sales will stop.

Return Cargo Clarity

“The concerns are more on how we as a sector or an industry are able to adapt the requirements, particularly e-way bills,” R Dinesh, Chairman National Committee on Logistics, CII, and MD-TVS Logistics, told BusinessLine on the sidelines of a conference here.

Speaking at the conference, Ranjit Mayne, Senior Director-Operations, Shopclues, a firm in marketplace model, pointed out that logistics firms might face problems while handling return cargo as the cargo may be returned many days after delivery and generation of the e-way bill.

This also was flagged by Dinkar Singh, Head-Regulatory Affairs, DHL Express. Stating that vendors are not resisting compliance, Mayne said that initial days post-GST implementation, number of vendors might go down, but the opportunity cost of losing out the opportunity to sell products to all India market will encourage them to register over time.

Future Supply Chain, for instance, said it is considering a move to pay its transporters and vendors subject to them being GST compliant.

“We are looking to link payments to our transporters or smaller vendors being compliant instead of that being time-based like 30 or 60 days or so,” Divyansh Rathore, Vice President, Operations, Future Supply Chain, said.

Noting that almost 70 per cent of its vendors are not on ERP, Future Supply chain said it is pushing its chartered accountants and consultants to ensure that the vendors have become GST compliant.

Major plyers like GMR Group’s Vice President – Corporate tax, Sanjay Gulati said they are conducting workshops asking their players to be compliant. Flipkart’s Satyam Choudhary, Senior Director-Supply Chain, Flipkart, said they are educating their vendors on steps to be taken to become GST compliant.

CII also has opened a helpdesk for its members to help solve their doubts.

Warehouse

The warehouse consolidation process has already started. For instance, flipkart will locate a single warehouse or fulfilment centre at Binola, Haryana, instead of three warehouses – one each in Uttar Pradesh, National Capital Territory of Delhi and Haryana.

“It has also shut its warehouse in Ghaziabad and transferring the same to Lucknow as from there, it can also serve the eastern region,” .

Future Supply Chain has also selected five big box locations, basically large warehouses from where a large number of places can be served. It will now allot space in these locations to firms looking to consolidate. “One is in Nagpur, others are in Kolkata, Delhi, Bengaluru and Mumbai.

[The Hindu Business Line]