GST authorities explore registration mechanism for e-commerce firms sharing warehouses

Goods and Services Tax authorities are working on addressing the issue of taxation on last mile delivery for e-commerce goods. GST officials aim to account for the fact that warehouses are often shared by multiple suppliers and are exploring a ‘shared workplace’ designation.

“We are working to see whether a ‘shared workplace’ or ‘co-working space’ concept can be implemented for the warehouses maintained by e-commerce companies to store goods of multiple suppliers,” a GST official told the Press Trust of India. “It is currently in the phase of discussion. Whether a shared workplace concept can be implemented for e-commerce warehouses would be discussed at the law committee and then presented before the GST Council.”
 
GST authorities raised the issue upon finding that multiple businesses had geo-tagged the same warehouse location as an ‘additional place of business’, the Economic Times reported. GST regulations do permit e-commerce businesses to store their products in a warehouse which houses products by multiple companies as long as the location is listed as an ‘additional place of business’. The issue arises when multiple tax paying entities geo-tag the same location as a place of business as this could amount to a fraudulent registration.
 
GST authorities have also noted that warehouses which house multiple businesses should not be held accountable for a single supplier defaulting. Moreover, tax officers could attribute this risk to individual e-commerce businesses, according to GST officials. As e-commerce continues to grow and evolve in India, GST authorities will need to continue to update regulations.