Abstract/Preface

This paper explores the intricate relationship between the Goods and Services Tax (GST) and the growth of e-commerce in India, a topic of significant relevance in today’s rapidly evolving digital economy. As India positions itself as one of the largest e-commerce markets globally, understanding the implications of GST on this sector is crucial for policymakers, business owners, and legal scholars alike.

The journey of researching this topic has been both enlightening and challenging. The implementation of GST in July 2017 marked a transformative moment in India’s taxation landscape, aiming to streamline compliance and enhance revenue collection. However, it also introduced complexities that have profound implications for e-commerce businesses, particularly small and medium-sized enterprises (SMEs). This dissertation seeks to analyse these complexities, examining both the benefits and challenges that GST presents to the e-commerce sector.

Throughout this research, I have drawn upon a wide range of legal texts, government reports, and scholarly articles to provide a comprehensive understanding of the legal framework governing GST and its impact on e-commerce growth. The doctrinal approach adopted in this study allows for an in-depth analysis of existing laws and their interpretations, shedding light on the ambiguities that often arise in practice.

I am grateful for the guidance and support received from my academic advisors and peers during this research process. Their insights have been invaluable in shaping my understanding of this multifaceted topic. I hope that this dissertation contributes meaningfully to the existing body of knowledge and provides practical recommendations for stakeholders navigating the intersection of taxation and digital commerce in India.

Introduction

The e-commerce sector in India has experienced remarkable growth over the past decade, emerging as a pivotal driver of economic development. As of 2023, the Indian e-commerce market was valued at approximately $116 billion, with projections estimating it will reach $123 billion by 2024, reflecting a compound annual growth rate (CAGR) of 21% from 2023 to 2030.[1] This growth is primarily fuelled by increasing internet penetration, the proliferation of smartphones, and changing consumer preferences that favour online shopping. In FY2023 alone, the industry recorded a 26.2% year-on-year growth in order volume, driven by a 23.5% rise in Gross Merchandise Volume (GMV).[2]

The e-commerce landscape is characterized by significant shifts in consumer behaviour, particularly among younger demographics. The fashion and accessories segment, for instance, witnessed a 19.5% increase in order volume during FY2023, while electronic products saw an impressive 46.8% growth.[3] Moreover, the market is increasingly dominated by direct-to-consumer (D2C) brands, which are expected to reach a valuation of $100 billion by 2025.[4]This transformation underscores the growing significance of e-commerce within India’s retail framework and its potential to reshape traditional business models.

The economic implications of this growth are profound. E-commerce not only contributes to GDP but also catalyses job creation across various sectors. The retail and e-commerce sectors are projected to add approximately 45% to the gross merchandise value (GMV) by 2030, with the Indian government aiming for a $2 trillion valuation for the retail sector by 2033.[5] Furthermore, initiatives such as “Made in India” and “Startup India” have been instrumental in fostering an environment conducive to e-commerce expansion, particularly for micro, small, and medium enterprises (MSMEs).[6]

[1]Deloitte, “India’s e-commerce market to reach $325 bn by 2030: Deloitte” The Economic Times, (date missing in document). available at: https://economictimes.indiatimes.com/industry/services/retail/indias-e-commerce-market-to-reach-325-bn-by-2030-deloitte/articleshow/114015493.cms?from=mdr (last visited on Feb 16, 2025).

[2]Akther, F., “E-commerce in India: trends, hurdles, and growth opportunities” 2 Formosa Journal of Science and Technology 2871 (2023).

[3]Gouëdard, P., Pont, B. and Viennet, R., “Education responses to COVID-19: Implementing a way forward” (2020).

[4]Soni, S., Trehan, D., Chotia, V. and Srivastava, M., Mamaearth: a digital first brand venturing offline. 14 Emerald Emerging Markets Case Studies 1-38 (2024).

[5]Aydinok, M., 2021. Shopify: Company Report (Master’s thesis, Universidade NOVA de Lisboa (Portugal)).

[6]Sabyasachi Bhattacharya, Federalism and its alternatives-2 available at: https://frontline.thehindu.com/columns/sabyasachi-bhattacharya/article25751231.ece. (last visited on Dec 26, 2018).