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E-commerce platforms seek GST clarification on delivery services
Ambiguity over Goods Transport Agency and local delivery classifications has triggered industry-wide concern.
Experts say that timely clarification from the Finance Ministry could prevent disruptions in e-commerce logistics, reduce compliance-related disputes, and ensure revenue stability for the government.
As confusion deepens over the Goods and Services Tax (GST) treatment of delivery services offered through e-commerce platforms, industry bodies and online marketplaces are seeking urgent clarification from the Ministry of Finance.
The Forum for Internet Retailers, Sellers & Traders (FIRST India), part of the India SME Forum, has written to Finance Minister Nirmala Sitharaman, requesting a formal clarification on how Goods Transport Agency (GTA) and local delivery services should be treated under the amended GST framework.
Sources confirmed that Meesho, too, has written separately to the ministry seeking guidance.
Storyboard18 has reached out to Flipkart and Amazon for comments, but both companies are yet to respond.
Industry seeks clarity post-GST amendment
In its representation, FIRST India, which represents over 300 small and medium e-commerce platforms and digital marketplaces, said that the recent amendments introduced, Central Tax have created significant uncertainty among e-commerce operators, logistics providers, and sellers.
The amendments, based on the 56th GST Council’s recommendations, introduced changes to the treatment of delivery services facilitated via e-commerce platforms. However, the lack of clear distinction between “Goods Transport Agency (GTA)” and “local delivery services” has led to multiple interpretational challenges.
“Many platforms are unsure whether intra-state or short-distance deliveries qualify as ‘local delivery services’ under Section 9(5) of the CGST Act, where e-commerce operators are now liable to pay GST at 18%,” the letter stated.
Confusion over compliance and classification
Traditionally, e-commerce platforms relied on third-party logistics partners under two models: platform-managed logistics (where delivery charges are included in the seller’s invoice) and direct logistics (where logistics companies issue consignment notes and qualify as GTA).
However, the new framework has blurred these lines. “Stakeholders are uncertain about whether services involving short-distance transport or warehouse transfers should be treated as GTA or local delivery,” the letter noted, warning that this could lead to double taxation, operational disruptions, and litigation.
The SME forum has sought specific clarifications from the ministry on:
- What qualifies as “local delivery services” and whether intra-state transport falls under this category;
- Whether the existing B2C exemption for GTA services continues to apply when goods are delivered directly to consumers;
- Who bears the GST liability in cases where logistics providers work through e-commerce operators.
The forum also urged the government to allow a transition period for implementation, citing that sudden changes could disrupt business operations and compliance systems, especially for MSMEs.
Concerns over uneven compliance and alleged misuse
The issue has gained additional complexity following allegations of non-compliance by major e-commerce players. In October, a Chennai-based lawyer wrote to Commerce and Industry Minister Piyush Goyal, accusing Flipkart India Pvt. Ltd. of continuing to claim undue GST exemptions on transportation charges despite the amended rules.
In his letter dated October 16, 2025, K. Narasimhan, Advocate at the Madras High Court, alleged that Flipkart’s billing model still enables it to evade GST liabilities through practices that result in “substantial revenue loss” to the government.
“Despite the legislative amendment and the unambiguous message it sends, Flipkart continues to operate as if no such amendment exists,” Narasimhan wrote. He claimed the company continued to classify certain delivery charges under GTA exemptions meant for small-scale operators, provisions that no longer apply after the September amendment.
This complaint followed earlier concerns raised in August, when Narasimhan accused the platform of splitting invoices into product and transport components to claim dual benefits. “It was a case of having their cake and eating it too,” he said, arguing that this practice allowed the company to exploit GST exemptions while paying reduced taxes under the forward charge mechanism.
The advocate warned that such practices set a “dangerous precedent” by allowing large players to delay compliance while smaller sellers face immediate penalties. He urged the government to launch a comprehensive investigation into Flipkart’s GST practices and enforce stricter compliance protocols across the e-commerce sector.
Broader implications for e-commerce and MSMEs
The SME Forum’s letter underscores how critical the logistics ecosystem is to India’s MSME-driven digital commerce growth. “Without consistent tax treatment and clear compliance parameters, small sellers risk being penalised for ambiguities beyond their control,” it noted.
Experts say that timely clarification from the Finance Ministry could prevent disruptions in e-commerce logistics, reduce compliance-related disputes, and ensure revenue stability for the government.
Until such guidance is issued, platforms remain in limbo, balancing compliance with business continuity.
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