National, November 20, 2025: 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 India said, “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:
• The geographical and operational definition of “local delivery services” and its distinction from GTA and courier services;
• The applicability of the existing B2C exemption for GTA services under Notification No. 12/2017 when goods are delivered directly to consumers;
• The treatment of intra-state GTA services facilitated through e-commerce platforms; and
• Whether ancillary services such as cash-on-delivery handling or product verification at delivery points are to be treated as part of GTA services or separately taxable activities.
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.
About FIRST India
FIRST India’s strategy is based on engaging, reporting and communication. Together with its members, it gathers issues and evidence of obstacles hampering the development of the sector and translate them into priorities. Through collaboration with other relevant stakeholders, and using its members’ expertise, FIRST India develops positions and proposes workable solutions to the legislators in order to foster the growth of the Indian retail and ecommerce industry. FIRST India works together with all Indian stakeholders to rapidly remove the remaining barriers in digital commerce. It is mandated to identify problems as well as measure progress in the trade and commerce market, following from policy initiatives that will be taken at the National as well as Global level.