IntroductionE-commerce has transformed the way of doing business in India. The Indian e-commerce industry has been on an upward growth trajectory and is expected to grow at a compound annual growth rate (CAGR) of 28% during 2016-2020 to touch USD 63.7 billion by 2020 and surpass the United States by 2034. The industry reached $14.5 billion in 2016. Much of the industry's growth has been sparked by increasing Internet and smartphone penetration. The ongoing digital transformation in the country is expected to increase India's total Internet user base to 829 million by 2021 (59% of the total population), from 373 million (28% of the population) in 2016, while the total number of networked devices in the country The country is expected to reach two billion by 2021, up from 1.4 billion in 2016. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay Total online spending, including domestic and cross-border purchases, is expected to increase 31% year-on-year to Rs 8.76 trillion ($135.8 billion) by 2018. Cross-border purchases by consumers Indians touched Rs 58,370 crore ($9.1 billion) in 2016, and is expected to increase by 85% year-on-year in 2017. The top 3 countries preferred by Indians for cross-border shopping in 2016 were the States United States (14%), the United Kingdom (6%) and China (5%). India's consumer Internet market is expected to grow 44% year-over-year, reaching $65 billion in 2016. 2017, up from $45 billion in 2016. Online travel agents account for the largest market share ( 70%) in the consumer internet market, while the remaining 30% is occupied by horizontal e-tailing, fashion, furniture, grocery, hotels, food tech, taxi aggregators, education tech and alternative lending, among others. India's Internet industry is likely to double to $250 billion by 2020, growing to 7.5% of gross domestic product (GDP), with the number of mobile Internet users growing to around 650 million and that of high-speed Internet users reaching 550 million.5 About 70% of total automobile sales in India, worth $40 billion, are expected to be digitally impacted by 2020, compared to $18 billion in 2016. Road Ahead The e-commerce industry has directly impacted micro, small and medium enterprises (MSMEs) in India by providing means of financing, technology and training and has a favorable cascading effect also in other sectors. The total size of the e-commerce sector (B2C e-tail only) in India is expected to reach $101.9 billion by 2020. Technology-enabled innovations such as digital payments, hyperlocal logistics, of customers based on analytics and digital advertising are likely to support the growth of the sector. With the increase in the number of electronic payment gateways and mobile wallets, cashless transactions are expected to make up 55% of online sales by 2020. Growth in the e-commerce sector will also stimulate employment, increase export earnings, increase tax collection from former officials, and provide better products and services to customers in the long term. Impact of GST on e-commerce industry: Commerce or electronic commerce (an online shopping center) handles the purchase and sale of products and services exclusively through electronic channels. E-commerce captures approximately 33%of the global market with positive growth in the near future. As per the latest 21st meeting of the GST Council, registration for all taxpayers registered under the TCS can start registration from 18 September 2017. Section 43B(e) of the GST Model Law defines an Electronic Commerce Operator (Operator) as any a person who, directly or indirectly, owns, manages or manages an electronic platform engaged in facilitating the provision of goods and/or services. Furthermore, a person who provides information or other services incidental to or connected to such provision of goods or services via electronic platform would be considered as an Operator. A person providing goods/services on his own behalf, however, would not be considered an Operator. For example, Amazon and Flipkart are e-commerce operators because they facilitate actual suppliers to supply goods through their platform (popularly called Marketplace model or Fulfillment model). However, Titan providing watches and jewelry through its website would not be considered an electronic commerce operator for the purposes of this provision. Similarly, Amazon and Flipkart will not be treated as e-commerce operators in respect of supplies they make on their own behalf (popularly called inventory model). The MGL provides that every trader has to register on the GST portal irrespective of the specified cut-off threshold for registration for GST. This is the biggest disadvantage for small retailers as they work with fixed working capital and will have to pay taxes and claim refund later which is a cumbersome process. The success of the e-commerce industry largely depends on the growing number of retailers. entrepreneurs, who fall under the category of unorganized retail sector. The government has brought these entities under the ambit of the GST with the aim of broadening the tax base and has introduced specific provisions for e-commerce companies. In the current regime there is no uniformity in tax rates between different states and therefore each state determines its own specific tax rates for products. For example, a cell phone in State 1 is taxed with VAT at 5% and in State 2 at 14.50%. As a result, sellers in state 2 would not want to sell locally but would prefer to sell from state 1, resulting in a loss of revenue for the state. E-commerce operators have set up distribution centers only in certain locations and collect applicable VAT on sales made from such centers. To offset the loss of VAT revenue, many states have recently imposed an entry tax on goods from other states, which discourages sales from other states. The entry tax acts as a trade barrier, restricts the free movement of goods from one state to another and increases costs for traders. However, such trade barriers will cease to exist as the GST is inclusive of the entry tax. The destination state earns revenue from GST on sales regardless of where the sale was made. Also, there is no tariff arbitrage under GST as the classification of goods and rate of GST are common across states. It is mandatory for all e-commerce operators to collect a tax at a rate of 2% as TCS on the net value of sales made. from suppliers via e-commerce operators. Such TCS has to be deducted in each state and deposited accordingly. This poses significant compliance challenges for sellers and can discourage sales through the marketplace model. However, this may not be applicable to inventory-based models, where the e-commerce operator carries out the