E-Commerce Operators Guide to GST

Electronic commerce has been the subject of intense growth in India. India is behind many of the other countries in terms of the market size for E-commerce, but soon in the future, it would grow fast and predicted to become one of the largest in the world over the next decade. In this article, we look at the impact of GST on e-commerce operators and major provisions relating to ecommerce operators in India.

Electronic Commerce Operator under GST

"Electronic commerce operator is every person who, owns, operates or manages digital or electronic facility or platform for electronic commerce." On the other hand, sale of a company's products through its website would not be called an e-commerce activity. Hence, the basic functions of an E-commerce operator are:

To display the available products and services in the website.
Arrange for dispatch through any of the vendors.
Post the successful supply by the vendors, the e-commerce operator proceeds to settle the payment of the vendor on a periodical basis.

Ecommerce Operator GST Registration

All E-commerce operators need to obtain GST registration once the turnover crosses the threshold limit. GST registration for ecommerce operators was mandatory irrespective of turnover criteria, until the 23rd GST Council meeting. The GST Council in the 23rd GST Council Meeting, implemented the threshold limit benefit to e-commerce operators. The threshold limit for every businesses is 20 lakhs, and 10 lakhs for special category states, except Jammu and Kashmir which is fully exempt.

Tax Collection at Source (TCS)

E-commerce operator not being an agent should collect TCS - an amount at the rate of 1% from the net value of taxable supplies made through the ecommerce platform. The amount so deducted and collected is known as Tax collection at source. E-commerce operators must collect this along with the taxes applicable. This tax will have to be collected on payment to vendors which will be subject to reconciliation at a later stage. The TCS amount collected by the e-commerce operator must be deposited to the Government by the operator within a period of 10 days after the end of the month in which the amount was collected. The concerned operator must also file an electronic statement containing details of all amounts collected by him for the outward supplies made through his portal. There are a few exceptions to this rule, where TCS need not be collected:

If the operator is acting as an agent.
Consideration has been paid directly from the recipient to the supplier.
Services provided are notified under Section 8(4) by which the operator is liable to pay service tax.

GST Return Filing

The E-commerce operator must furnish the following details:

Supplies of goods/services effected through concerned operator during any period.
Stock of goods being held by the actual supplier in the premises of the e-commerce operator through whom supplies are made, provided the supplier has registered such premises as his additional place of business.

GSTR-8 Return

GSTR 8 return must be filed by taxpayers required to collect tax at source. E-commerce operators are required to collect tax at source. Hence, any persons operating an e-commerce venture must register for TCS, collect tax at source and file GSTR 8 return before the 10th of every month. Know more about GST return filing.

Matching Concept

Like everywhere in GST, E-commerce operations are also required to match their invoices. The returns of transactions filed by an ecommerce operator in his statement should match the returns filed by the concerned supplier. In case of any lapses on this part, it will be communicated to both the parties. Post communication of the same, if the supplier fails to rectify the flaw, then that would be added to the suppliers liability for the very next month, whereby he would have to pay tax along with the interest specified.

Input Tax Credit

TCS collected and paid by the e-commerce operator will later be reflected in the cash ledger of the supplier, based on the returns filed by the operator. It must be noted that only those goods which are capitalized on the books of accounts are eligible for Input Tax Credit.

Composition Scheme

Composition scheme is an option extended to the businesses whose turnover is below a certain limit. Ecommerce operators are not eligble for GST Composition SchemeGST Composition scheme. Click here for GST Registration and GST Return Filing