GST Authorities Explore ‘Shared Warehouses’ Concept for Simpler Taxation

shared warehouse

GST authorities are developing a mechanism to resolve the taxation and registration challenges associated with shared warehouses used by e-commerce companies. Since multiple suppliers store their goods for last-mile delivery in such shared spaces, warehouses have raised concerns under the Goods and Services Tax (GST) framework.

The issue surfaced after numerous suppliers listed the same warehouse as their ‘additional place of business’ under GST rules, an official disclosed. This practice has led to multiple taxpayers being geo-tagged to the same location, which raises red flags for tax officials who may suspect fraudulent registrations.

GST Authorities are, therefore, exploring the possibility of implementing a ‘shared workplace’ or ‘coworking space’ model for warehouses maintained by e-commerce companies. This shall help in streamlining the registration process while addressing the unique needs of e-commerce logistics.

Under the current GST law, suppliers can store their goods in a common warehouse, but they must register the warehouse as an additional place of business. The problem arises when multiple suppliers register the same address, potentially triggering unnecessary scrutiny from tax officers.

Another significant issue is the accountability of warehouses where multiple suppliers store their goods. There is a risk that if one supplier defaults, the warehouse or even the e-commerce platform itself could be held responsible, potentially harming their operations.

As per sources, the matter was discussed at a recent meeting between Central and state GST officers. The concept of a shared workplace for e-commerce warehouses is still under deliberation and will be reviewed by the law committee before being presented to the GST Council.

This initiative by GST authorities reflects the evolving landscape of e-commerce logistics and the need for regulatory frameworks to keep pace with industry innovations. The outcome of these discussions could lead to significant changes in how e-commerce warehouses are managed and taxed, ultimately fostering a more efficient and fair system for all stakeholders involved.

Industry experts suggest that GST authorities should implement a system to distinctly identify warehouses and train tax systems to differentiate between the tax liabilities of these facilities and those of the suppliers registered there. It shall further facilitate more accurate risk assessments by tax officers.

The GST authorities have introduced geo-tagging, which requires taxpayers to provide precise locations for all registered premises. This measure helps tax officers identify the exact locations of registered businesses.

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