Resulting from the 25th GST council meeting, the government has reduced the GST rates for home and local services startups to 5% from existing 18%.
Online services startups had talked to the government over the issue mentioning the 18% GST rate for such services was harmful to the business and was making unjust advantage to offline stores who stayed away from tax net as they work in the unorganised state.
Owners of startups said that the latest development and tax reduction would be a positive move for businesses and the double-digit growth is expected on a monthly basis looking forward. Most of the companies noticed down that the total orders were reduced and as a result, a single digit growth was obtained after GST roll out.
Before the latest notifications, online companies providing salon, housekeeping and other similar kinds of services required to pay 18% GST if they cross Rs 20 lakh or more turnover on yearly basis.
Online services providing startups said that the original revenue collected by them is in form of commission charges and not like the marketplace such as electricians and carpenters who earn the full fees for their services.
Read Also: Goods and Services Tax Impact on E-commerce Sector in India
Here 18% GST became the reason to charge extra money from the customers than their offline counterparts which charge less money.
