GST implementation is proving very hard for many of the startups which provide home services like UrbanClap and Housejoy. As these startups are suffering from higher 18 percent GST upon their services, which is a troublesome issue for them. Home assistance services like plumbing, carpenter and cleaning which is sourced through online platforms are now billed at 28 percent GST which is making neighbourhood alternatives much lucrative.
The micro-entrepreneurs have less than 20 lakh turnover not even crossing the threshold but still facing higher taxation as normal due to its online tie up. Also, the services are lashed with the taxes which they themselves cannot absorb, making them tougher to get going. Housejoy CEO Saran Chatterjee stated that “In light of the current major disparity between online and offline sectors, service providers are required to pay a staggering 18% GST if they operate in the online world, unlike the offline world where they do not need to pay the same.”
August notification stated that the tax will be applicable to all the trading units which are going through the online mode of trading irrespective of traders turnover. Also, the taxes would be collected by the online platform and has to be duly submitted by them to the authorities. Just after paying taxes it now makes sense to do filing and return work as normal which also increase their compliances.
UrbanClap cofounder Abhiraj Singh Bhal, also mentioned that “A differential taxation regime is, in the long run, a lose-lose for everyone — customers, service professionals, and the government.” Housejoy CEO Saran Chatterjee was very much depressed with the newly incorporated GST regime and its anti-business provisions. He mentioned some of critical aspects of the new tax regime in his own words, “While home services companies like Housejoy are a convenient way for customers to find reliable, trained experts, one cannot overlook the fact that it is a great platform for such skilled professionals to expand their reach and multiply earnings exponentially.”
“However, the current taxation system with 18% GST is clearly unfavourable for all parties — service professionals and customers included, It hits largely individual service providers… This is making their service costlier vis-à-vis offline providers,” he added. The overall effects of GST on service providers on the digital platform is not at all fruitful for the companies to grow and prosperous and has made conditions critical which needs some concern from the government.
Why no article on Online Advertising? Many startups and freelancers are involved in making revenue via online ads and GST at 18% has made life a hell, additionally forcing forex revenue to pay 18% for revenue from non-taxable territory and then claim for the same is like tightening the noose even further in an expectation that some air will be available in the future. Claiming export of service under zero GST but forcing service providers to pay from their pocket is not good, this will ruin every startup.