GST for E-commerce

GST has a major impact on ecommerce in India. With more and more commerce happening online, the Government has provided special provisions and regulations that ecommerce companies have to comply with under GST. In this article, we look at some of the faqs received from ecommerce operators with respect to GST.

E-Commerce

Indian E-commerce is at best thrive and is increasing enormously every year. It is anticipated that it would grow 6 to 10 times in a span of next five years. The latest analysis shows the larger disposable incomes and the expediency afforded by online shopping are the two main factors which are creating magic for E-commerce in India. Due to tremendous increase in the same and looking to the complexity of taxation in the matter, government has provided special provisions and regulations for ecommerce companies under GST. E-Commerce has been defined u/s. 2(44) of CGST Act, 2017 which means the supply of goods or service or both including digital products over digital or electronic network. E-Commerce Operator has been defined u/s. 2(45) of CGST Act, 2017 which means any person who directly or indirectly owns, operates or manages digital or electronic facility or platform for e-commerce.

GST Registration for E-Commerce

It is mandatory for e-commerce operator (as defined above) to obtain GST registration irrespective of the value of supply made by them. GST Registration for the person selling through e-commerce operator: All the members who undertake supplies through e-commerce websites, should mandatorily obtain GST registration irrespective of the value of supply made by them. The entity should apply for the GST registration irrespective the ownership of the websites and goods supplied. Services Notified u/s 9(5) of CGST Act, 2017: In case services notified u/s 9(5), the e-commerce operator is liable to pay tax, on behalf of the suppliers. If such services are supplied through its platform, all the provisions of the Act shall apply to such e-commerce operator as if he is the supplier for this purpose

Tax Collected at Source (TCS)

The Tax collected at source (TCS) acts as a mechanism, wherein, the e-commerce operator collects part of the tax operator when the supplier supplies the required goods or service through its portal. TCS deducts at the rate of 1% on the net value of the goods or services supplied through the e-commerce operator i.e. an e-commerce operator should deduct tax @1% of the net value of taxable supplies. The e-commerce operator shall collect the TCS with respect to supplies collected by such operator from customers and transferred to actual supplier. The e-commerce operator should remit to government before 10 days after the end of the month from the date of the invoice created. TCS will be available as credit while filing GSTR-2 return.

Place of Supply for E-Commerce

GST is destination based tax. Goods / services will be taxed at the place where they are consumed meaning thereby place from where goods / services are sold is not at all relevant, however, the place, where goods / services are consumed, would be treated as place of supply under GST.

GST Return Filing for E-Commerce

GSTR – 8 return is to be filed by E-commerce operator every month within 10 days after the end of such month. Under GSTR-8 return details of outward supplies of goods and service made by sellers through the platform and amount of TCS collected is to be reflected. E-commerce operator is also required to file an annual statement by 31st day December following the end of the financial year in which the tax collected. The amount of TCS paid by the e-commerce operator to the government will be reflected in the GSTR-2 of the actual registered supplier (on whose account such collection has been made) on the basis of the statement filed by the e-commerce operator. The following details of supplies made through an e-commerce operator, as declared in FORM GSTR-8, shall be matched with the corresponding details declared by the supplier in FORM GSTR-1:—

GSTIN of the supplier;
GSTIN or UIN of the recipient, if the recipient is a registered person;
State of place of supply;
GST Invoice number of the supplier;
Date of invoice of the supplier;
Taxable value; and
Tax amount

GSTR 1 Return

It is a monthly return filed for sales or outward supplies. Every business registered under Goods and Services Tax must file GSTR1. 10th day of following month is the due date for filing GSTR – 1 by all entities.

GSTR 2 Return

It is a monthly return of purchases or inward supplies. Every registered person must file GSTR 2 return except an Input Service Distributor, non-residential taxable person and Person who is required to deduct the TDS or e-commerce operator system. Cut off is 15th day of succeeding month.

GSTR 3 Return

It’s a monthly GST return that is divided into part A and B. Part A contains the information that is furnished through returns in forms GSTR-1 and GSTR-2, based on other liabilities of previous tax periods. This will be generated electronically. Whereas Part B contains the tax liability, interest, penalty, and refund claimed from cash ledger. Also, it is auto-populated. The tax liability is calculated based on GSTR – 1 and after adjustments for Input Tax Creditclaimed in GSTR-2. Every registered person must file GSTR-3 return except for the following except an Input Service Distributor, non-residential taxable person and Person who is required to deduct the TDS or e-commerce operator system. The due date for GSTR-3 is 20th day of following month. Know more about GST Return Filing.

GST on Good Returned by Buyers

The e-commerce operator should collect tax only on the net value of the taxable supplies. The “net value of taxable supplies” means the aggregate value of taxable supplies of goods, services or both other than the services on which entire tax payable by the e-commerce operator, made during any month by all registered persons through such operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month.

GST E-Commerce FAQs

Should e-commerce operators register with GST?

Yes, registration under GST is mandatory for all e-commerce operators irrespective of the sales turnover. Hence, prior to commencing business as an ecommerce operator or within 30 days of commencing business, all ecommerce operators are required to be registered under GST.

Should the sellers acquire GST registration for using e-commerce platforms?

Yes, persons undertaking a supply through e-commerce operators are also required to obtain GST registration irrespective of sales turnover. Hence, any person who intends to sell on Flipkart or Amazon or Snapdeal must obtain GST registration.

What is GST TCS?

Under GST, the Ministry of Finance (MoF) implemented a mechanism, Tax Collection at Source (TCS) similar to TDS where the e-commerce operator collects part of the tax from the buyer. The TCS shall apply when the supplier provides goods or services through a registered portal. For example, when an individual purchases a product from Flipkart, the company Flipkart shall deduct TCS when the costumer bills the product. Prior to passing on the payment collected to the supplier, the ecommerce operator must deduct TCS at the rate of 1% from the supplier and remit the same as TCS to the Government. The supplier shall receive the deducted TCS by the ecommerce operator as a credit.

What is the rate of GST TCS?

TCS shall apply at the rate of 1% on the total net value of the goods or services supplied through the e-commerce operator. For example, if the net value of the goods sold to a customer and bills at Rs.1 lakh by the e-commerce operator, then the e-commerce operator should deduct and remit Rs.1000 on behalf of the supplier as Tax Collected at Source or TCS.

What is the due date for remitting GST TCS?

The e-commerce operator shall remit the GST TCS to the Government before 10 days after the end of the month. The entity shall calculate the date from the date of the invoice made.

How to claim credit of TCS deducted by e-commerce operators?

The customers shall receive the TCS deducted as credit by the e-commerce operators and remitted by the Government while filing GSTR-2 returns. The registered taxpayer can use the TCS remitted by an e-commerce operator to set off GST liability while filing GSTR 3 or GSTR 3B returns.

Can e-commerce suppliers store their goods in a common warehouse?

Yes, suppliers on an ecommerce platform can store their goods at a common warehouse. Before storing goods in a common warehouse, the supplier must add the warehouse of the ecommerce operator as a place of business on the GST registration.

Will online travel agents be liable for TCS?

Yes, online travel agents supplying services through an ecommerce platform will be liable for TCS.

Should e-commerce operators require to file GST returns?

Yes, ecommerce operators should mandatorily file GSTR-8 every month and file a GST annual report. In the monthly GSTR-8 return, ecommerce operators must provide details of outward supplies of goods or services made by sellers through the platform and the amount of TCS collected.