FIRST India Urges Ministry of Finance for Clarityon GST Applicability to Logistics Services

The e-commerce and retail logistics sector in India faces mounting uncertainty over recent GST amendments concerning transportation services, prompting urgent industry intervention. The Forum for Internet Retailers, Sellers & Traders (FIRST India), representing over 300 e-commerce platforms, logistics startups, and digital marketplaces, has approached the Union Ministry of Finance seeking immediate clarification on GST implications for Goods Transport Agency (GTA) services and local delivery operations. The recent changes (Notification No. 17/2025–Central Tax, dated September 17, 2025) has created ambiguity between "local delivery" and "GTA" services. The new provision under Section 9(5) of the CGST Act requires e-commerce operators to pay 18% GST on "local delivery" services, except when service providers are registered under Section 22(1). However, without clear definitions of what constitutes "local delivery," MSMEs are struggling to classify short-distance or intra-city transport services.

 

The amendments following the 56th GST Council Meeting were intended to streamline transportation services taxation, the subsequent notifications have inadvertently created considerable confusion among ecosystem participants. Of particular concern is the impact on e-commerce operators, logistics service providers, and thousands of MSME sellers who form the backbone of India's digital retail infrastructure.

This lack of clarity has triggered operational and compliance challenges across the logistics value chain. Businesses are unclear on who bears the primary liability to pay tax – the e-commerce platform, the logistics partner, or the seller, and face inconsistencies in documentation and invoicing. The risk of double taxation looms large, particularly in cases where a shipment involves both interstate and local movement, handled by different service providers. The small logistic service providers are grappling with different model of large ecommerce players. Inconsistencies in interpretation have led to varying approaches among major e-commerce players, with Flipkart claiming GTA exemption while other significant platforms like Meesho are not availing this benefit, as they believe they do not qualify under the exemption category.

Sushma Morthania, Director General, FIRST Indiasaid, “The GST Council’s move to streamline compliance and plug loopholes is well-intentioned, but the lack of operational clarity on what qualifies as a ‘local delivery service’ has led to widespread confusion.E-commerce logistics is the backbone of MSME participation in India’s digital economy. A timely clarification will help ensure uniform compliance, protect small sellers from unintended tax burdens, and safeguard business continuity for thousands of logistics partners and digital retailers.”

In this regard, FIRST India has sought clarifications from the Ministry on the following:

 

FIRST India emphasizes that a definitive clarification from the Ministry is crucial to ensure industry-wide compliance and fair competition. The organization stresses that clear guidance on whether Flipkart's approach of claiming GTA exemption or the stance taken by other major players like Meesho is correct would be invaluable. Such clarity would enable FIRST India's members to serve the nation in accordance with the true spirit of the law, preventing any potential misinterpretation of well-intentioned regulations. This would not only foster a level playing field but also help businesses avoid inadvertent non-compliance due to ambiguous interpretations of the amended GST provisions.