India's ecommerce and logistics industry is facing mounting uncertainty over the implementation of recent GST amendments, with leading platforms and delivery service providers urging the Ministry of Finance to issue immediate clarifications. First India, an industry body representing over 300 e-commerce platforms, logistics startups and digital marketplaces, has formally written to the government requesting guidance on the tax treatment of Goods Transport Agency (GTA) services and local delivery operations.
Notification 17/2025 Triggers Sector-Wide Confusion
The concerns stem from Notification No. 17/2025-Central Tax, issued on September 17, 2025, amending Section 9(5) of the CGST Act. Under the revised rules, e-commerce operators must pay 18% GST on "local delivery" services unless the service provider is registered under Section 22(1).
However, the lack of a statutory definition for "local delivery" has created ambiguity for businesses across the supply chain. MSMEs, which form the majority of sellers on online platforms, are particularly unsure whether short-distance, intra-city movement qualifies as:
- GTA services,
- Local delivery, or
- Courier services.
This uncertainty is now spilling into operations, compliance processes and invoicing practices.
E-commerce and Logistics Firms Flag Operational Challenges
The GST amendments introduced following the 56th GST Council Meeting were intended to simplify compliance in the transport sector. Instead, the resulting confusion has complicated the responsibilities of e-commerce platforms, logistics partners and sellers.
Key challenges include:
- Unclear GST liability: Companies are unsure whether the platform, logistics provider, or seller must pay the 18% GST.
- Risk of double taxation: Shipments involving interstate and local movement could be taxed twice if handled by different operators.
- Inconsistent invoicing: Documentation practices differ widely across operators due to varying interpretations of the new rules.
- Fragmented compliance: Smaller logistics operators find it harder to match the compliance frameworks of larger players.
Even major platforms have taken differing positions. Flipkart claims exemption under GTA rules, whereas Meesho does not, citing ineligibility, adding to the lack of uniform industry practice.
"Well-Intentioned, But Lacking Clarity": Industry Response
The Director General of First India said the amendments may aim to plug revenue leakages, but have left operational clarity missing.
"The GST Council's move to streamline compliance and plug loopholes is well-intentioned, but the lack of clarity on what constitutes a 'local delivery service' has led to widespread confusion. A timely clarification is essential to ensure uniform compliance, protect small sellers from unintended tax burdens, and safeguard business continuity for thousands of logistics partners and digital retailers."
Industry Requests Detailed Government Guidance
First, India has submitted a set of detailed clarification requests to the Ministry of Finance, including:
- A clear geographical and operational definition of "local delivery"
- Distinction between local delivery, GTA and courier services
- Applicability of Notification No. 12/2017 (B2C GTA exemption) for deliveries made directly to consumers
- Treatment of intra-state GTA services facilitated through ecommerce platforms
- Whether additional services like cash-on-delivery handling, product verification, or return facilitation should be taxed separately or treated as part of GTA
Urgent Clarity Needed to Maintain Fair Competition
The industry body emphasised that a definitive clarification from the government is critical to avoid misinterpretation and ensure a level playing field. Clear guidance would help unify compliance practices across platforms, particularly in cases where large firms like Flipkart and Meesho follow different tax positions and prevent inadvertent violations of the amended GST provisions.
With the ecommerce sector powering MSME participation in India's digital economy, stakeholders warn that prolonged ambiguity could disrupt operations, raise costs for sellers, and hinder business continuity across the logistics ecosystem.
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