GST Uncertainty Creates Anxiety for E-commerce Sellers Ahead of Festive Season

Ecommerce sellers on platforms like Amazon and Flipkart are worried about GST uncertainty ahead of the festive sale season. Sellers fear discrepancies in invoicing and potential compliance issues due to delayed tax rate integration. The uncertainty is creating anxiety among sellers, who rely on the peak shopping period for a significant portion of annual sales.

E-commerce sellers on platforms like Amazon and Flipkart are facing significant uncertainty as the government considers changes to the Goods and Services Tax (GST) slabs just weeks before the festive sales season. The proposed "GST 2.0" framework aims to simplify the tax structure by reducing it to two main rates: 5% and 18%, while phasing out the 12% and most of the 28% brackets. However, official notifications on categories and timelines are still awaited, leaving sellers and marketplaces in a state of limbo.

The uncertainty is causing sellers to hold back on finalizing festive discounts and campaign plans. Many shoppers are also delaying big-ticket purchases, expecting lower prices if tax rates are cut. Electronics, appliances, and lifestyle categories are seen as the most exposed to potential disruptions. Sellers worry about sudden adjustments to pricing, billing systems, and returns if the changes are introduced during the sales period.

Despite the uncertainty, industry executives expect a demand surge once the government provides clarity. However, since the festive season is the biggest sales period for online sellers, sudden tax changes now can disrupt pricing, promotions, and inventory planning. Many shoppers are delaying big-ticket purchases, hoping for lower prices once GST rates are finalized. Amazon and Flipkart are holding back on locking campaign dates and deals until official announcements are made.

Key challenges for sellers include pricing and margins, catalog and billing updates, returns and refunds, and cash flow. If GST on some products falls, sellers may need to quickly adjust MRPs and discounts. Mid-sale changes could squeeze margins. Every product listing tied to 12% or 28% will need re-mapping in billing systems and on marketplaces. Mistakes could lead to invoice errors. Orders placed before a tax change but returned afterward could create confusion in calculating refunds and input tax credits. The 1% TCS (tax collected at source) on e-commerce transactions will continue. Rate changes could still affect settlements and working capital. Electronics, appliances, and lifestyle products may see the most disruption since customers often wait for tax-related price drops.

Sellers should make a list of products in the 12% and 28% brackets and prepare alternate pricing scenarios. They should update billing software and ERP systems to handle two tax profiles. Clear refund rules should be set to avoid disputes if rates change mid-sale. Flexible promotions like coupons should be used instead of fixed discounts that may become unviable. Clear communication with buyers noting that prices include GST and will adjust automatically if tax rates change is also crucial.

Consumer market and retail experts say that if the government announces the new GST rates before major festivals, sellers and platforms will get only a short window to adjust. While this may create short-term pain, a simpler tax system could help in the long run. For now, sellers are in a "wait and watch" mode. Buyers are also holding off purchases, which means that once GST clarity comes, there could be a sudden rush in orders. The winners will be those sellers who are prepared to switch quickly.

References:
[1] https://www.newindianexpress.com/business/2025/Sep/01/explained-why-e-commerce-sellers-face-gst-uncertainty-ahead-of-festive-season
[2] https://www.easyship.com/blog/impact-of-new-us-import-duty-rules