E-commerce Logistics Sector Seeks Urgent Clarity on GST Rules Amid Rising Compliance Concerns

India’s fast-growing e-commerce logistics sector has raised alarm over ambiguity in recently amended GST provisions, warning that unclear tax treatment for local delivery and Goods Transport Agency (GTA) services is creating compliance uncertainties and the risk of double taxation. The concerns were formally communicated to Finance Minister Nirmala Sitharaman by the Forum for Internet Retailers, Sellers & Traders (FIRST India), a body representing more than 300 MSME-focused online platforms.

In a letter reviewed by Business Standard, FIRST India highlighted that the amendments to Section 9(5) of the CGST Act — which now require e-commerce operators to pay 18% GST on local delivery services — have introduced confusion rather than clarity. The rules state that platforms must shoulder the GST burden unless the service provider is independently liable under Section 22(1). While the change was aimed at improving compliance and preventing misuse of exemptions, the industry says it has opened gaps in interpretation that directly affect daily operations.

Ambiguity Over Local Delivery vs. GTA Services

A key point of contention revolves around whether short-distance and intra-state deliveries fall under local delivery services or continue to be classified as GTA services. Traditionally, India’s e-commerce logistics ecosystem has operated through two models:

1. Platform-managed logistics, where e-commerce companies coordinate deliveries through multiple partners, recover charges from sellers, and pass them on to customers; and
2. Direct logistics, where providers issue consignment notes and classify themselves as GTAs under GST rules.

However, with the latest amendments, companies remain unsure how to treat deliveries that involve invoicing, warehouse transfers, or consignment notes. The absence of clarity on whether these should be taxed under GTA rules or brought under the ambit of Section 9(5) has left transporters, aggregators, and online platforms operating in a grey zone.

Compliance Risks and Potential Double Taxation

Industry representatives warn that differing interpretations by field officers could lead to inconsistent assessments and retrospective tax demands. The risk of double taxation is also rising, as companies struggle to determine whether GST should be paid by the logistics provider, the e-commerce platform, or the seller. This uncertainty, FIRST India said, is already disrupting operations and may discourage small business participation in digital commerce.

“These changes have created uncertainty among transporters, aggregators, and e-commerce operators regarding applicable tax rates, liability under reverse or forward charge, and compliance responsibilities,” the letter from Sushma Morthania, Director General of India SME Forum–FIRST India, stated.

Industry Calls for Immediate Guidance

Given the scale of MSMEs dependent on digital retail, logistics firms and platforms are urging the finance ministry to issue clear guidance to ensure uniform interpretation across states. They argue that without clarifications, India’s logistics chain — particularly intra-city shipments and last-mile deliveries — may face operational delays and increased costs.

With the sector already navigating rapid growth, rising fuel prices, and intense competition, industry bodies say streamlined GST rules are essential to prevent disruptions in the country’s expanding e-commerce marketplace.