GST Registration for E-commerce operator
GST stands for Goods and Services Tax is an indirect tax which was brought in by the Government of India for replacing all other Indirect Taxes that were in force until then including Sales Tax, Service Tax, Excise Duty, and so on. GST basically shall be charged on the sale of certain goods and services and is applicable all over the country which is India. E-commerce refers to the purchase and sale of goods and/or services via electronic channels such as the internet. E-Commerce refers to any form of business transactions conducted online. The most popular example of E-Commerce is online shopping, which is defined as buying and selling of goods via the internet on any device. However, E-Commerce can also entail other types of activities, such as online auctions, payment gateways, online ticketing, and internet banking.
In the tax system, we can say that all the persons included in the market ranging from the producer to the buyer should pay tax which is GST when they undertake the sale of goods or services on which the same is applicable. The manufacturer will be liable to pay the GST on the raw materials that was purchased for manufacturing. When coming to the retailer, the manufacturer or distributor shall make value additions on which the GST will be paid by the retailer to the manufacturer or distributor. Finally, the buyer will purchase the goods or avail the services on which they will be held liable to pay the GST as per the applicable rates prescribed by the GST Acts in that are put in force.
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. Being a vast country with multiple states, and multiple indirect taxes has made it difficult for the business owners both domestic and foreign entities operating in India, to cope with the same. For ease of such business owners and the consumers who were knowingly or unknowingly paying huge amounts of taxes in different names and even where there was the cascading effect of taxes, GST Law is a saviour for every one involved in the same.
If we look out into the current market, we can see that everything is online. And the pandemic caused by the Covid-19 virus has increased the credibility and reliance on the same by the consumers as we all had to sit in the safety of our home and depend on such e-commerce operations for getting all the essential and non-essential items delivered.
So, e-commerce is an online platform that facilitates the selling of any goods or services. Amazon, Flipkart, and even Swiggy, Zomato, or such other platforms are available as e-commerce platforms that help us purchase goods and services along with equipping the business owners to sell their goods and services without needing a brick-and-mortar store for the same. Hence, as per section 2(44) of the CGST Act, Electronic Commerce or E-Commerce means “Supply of goods and/or services including digital products over the digital or electronic network”
Section 2(45) of the CGST Act defines this element which is an e-commerce operator. And as per this definition, it means, any assessee who is owning or operating or managing anelectronic or a digital platform for running an online commerce store.
Tax Implications of E-Commerce Operator under GST
Registration requirement of E-commerce operator
The e-commerce operators by virtue of section 24 are required to take registration under GST irrespective of the value of supply which was made by them. This means that the threshold exemption which can be availed by other business owners until the aggregate value of supply made by them during a year does not exceed a pre-defined amount as per the GST Law, cannot be availed by an e-commerce operator.
Registration requirement of Supplier under E-commerce Operator
If a person is supplying goods or services or both through the e-commerce operator (other than supplies specified under section 9(5) of CGST Act), they should also be taking GST registration irrespective of the value of supply made by them as per section 24(ix) of the CGST Act. But it is to be noted that this shall be applicable only if such supply is done through the e-commerce operator who is required to collect Tax Collected at Source (TCS) as per section 52 of the CGST Act.
And contrary to this, if the e-commerce operator supplies the goods in his own name then the supplier to e-commerce operators can avail the benefit of threshold limit under GST act. But this threshold exemption available to suppliers shall not be made available to the e-commerce operators.The e-commerce operator shall be liable to pay tax on the supplies which are specified under section 9(5) of the CGST Act, which is provided through their platform as if he or she is the supplier of such services.
Restriction for Supplier to take Registration under Composition Scheme
A person who is making any supply of goods or services or both through the e-commerce operator who is also required to collect TCS as per section 52 of the CGST Act, shall not be allowed to take registration under the composition scheme.
Registration of Foreign E-Commerce Operator
Foreign e-commerce operator is required to obtain registration under GST in each state or union territory (UN) of operation and shall be liable to collect TCS on such supply. If the oversees e-commerce platform or operator does not have a physical presence in the state or the Union Territory then they shall appoint an agent on their behalf.
TCS to be Collected under Section 52
The e-commerce operator shall collect 1% GST i.e., 0.5% CGST+0.5% SGST of the net value of the taxable supplies which are made through it, provided that the consideration with respect to the supply made should be collected by the e-commerce operator.
For this, the net value of taxable supplies shall mean the aggregate value of taxable supply of goods and services, made during a month by all the suppliers through the e-commerce platform and the operator reduced by the aggregate value of taxable supplies which returned to the sellers by consumers during the month. This net value of taxable supplies does not include the value of supply of services as per section 9(5) of the CGST Act.And the net value of taxable supplies shall not be computed at the gross level but to be calculated at the GSTIN level for each supplier.
TCS should be collected on a billing basis rather than the original collection of the same and it shall not be collected on any NIL Value. So, if sales returns are more than the sales or supply made then the TCS shall also be NIL and cannot be carried forward if it’s negative. And if the GST is payable under reverse charge mechanism, then there shall not be any liability arising with regard to TCS and the same shall not be collected on exempted supplies also. TCS shall not be applicable on the import of services.
The e-commerce operators should also note that payment or remittance of TCS to the government can be done only through the electronic cash ledger and cannot be remitted using the electronic credit ledger, within 10 days from the end of a month along with Form GSTR-8. They shall also file an annual return by 31st December of the succeeding financial year with concern to the respective financial year. They shall also file an annual statement in Form GSTR-9B with regard to the details of TCS collected during a year under section 52 of the CGST Act.
Levy and Collection of GST
There are majorly three parties involved in an e-commerce transaction and these include, the buyer, seller, and the e-commerce operator who provides the platform where the buyer and the seller would meet for placing orders and purchasing the products or availing the service. Here GST shall be applicable on the transactions between the buyer and seller plus the transaction between the seller and the e-commerce operator for making available the platform and is made like a commission or such other arrangement.
Once the collection, remittance, and filing of details with regard to the supply made by the supplier through e-commerce operator are done with, a matching of the details of outward supplies shall be carried out for the supplies which was made by the supplier who is registered under the GST law so as to summarize any difference or discrepancy that has to be rectified, which if not rectified shall result in an additional demand of tax liability from the concerned officials of the GST Law.
Services specified Under Section 9(5)
It is to be noted that, on the following services, the e-commerce operator shall be liable to pay the tax on behalf of the suppliers if the supply is made through the e-commerce operator and here all the provisions of the GST Law which apply to the supplier shall apply to the e-commerce operator. And these services include:
- Transportation of passengers by radio-taxi, motorcar, maxi cab and motorcycle by any person,
- Providing accommodation in hotels, inns, guest houses, clubs, campsites, or other commercial places meant for the residential or lodging purpose by any person except who is liable for registration as per the section 22 (1) of the CGST or Central Goods and Service Tax Act or the CGST Act,
- Services by way of the housekeeping, such as plumbing, carpentering, etc, by any person except who is liable for registration under sub-section (1) of section 22 of the said CGST Act.
Types of E-commerce platforms
It is an entity which owns, operates or manages digital or electronic facility or platform for E-commerce.
Suppliers/aggregator on E-commerce platform:
It is an entity which supplies goods or services on an E-commerce platform.
GST registration for E-commerce operators and sellers
- The sellers who are registering themselves for E-commerce platform shall register themselves under GST registration.
- There are several returns to be filed under GST for E-commerce operators and suppliers.
- Unlike regular businesses, there is no threshold exemption for the E-commerce suppliers and operators.
- These E-commerce entities come under the GST compliance irrespective of the value of supply and hen
- ce are required to file GST return online.
- GST return form includes the details such as purchases, sales, output GST and Input Tax Credit (ITC) which are to be submitted on monthly, quarterly or annual basis.
GST return filing forms for E-commerce operators and sellers
- E-commerce suppliers/aggregators are required to file Form GSTR-1, GSTR 2, GSTR 3 monthly and GSTR-9 is to be filed annually.
- E commerce operators are required to file their GST return in form GSTR 8 in monthly basis.
Form GSTR 1
- GSTR 1 is a monthly return filed for sales or outward supplies.
- Every business registered under Goods and Services Tax must file GSTR 1.
- The due date for filing GSTR 1 for E-commerce sellers would be 10th day of following month.
Form GSTR 2
- GSTR-2 is a monthly return for inward supplies of goods or services or both received during a tax period.
- The filing of GSTR 2 makes them eligible to avail Input Tax Credit wherein the taxpayer can claim the refund of tax on purchases or deduct that much amount from the tax payable on outward supplies.
- The due date for GSTR 2 would be 15th of subsequent month.
Form GSTR 3
- GSTR-3 is a consolidated monthly return which contains details of tax liability along with the provisional GST identification number collected on outward supplies and tax paid on inward supplies by registered E-commerce supplier/seller.
- It is an auto-populated process through GSTR-1 and GSTR-2 of the registered person.
- The due date for GSTR 3 return filing would be 20th of the next month.
Summary Chart for Supplier taking Registration
|PARTICULARS||THRESHOLD LIMIT EXPEMPTION AVAILABILITY||CUMPOLSORY REGISTRATION||PERSON LIABLE TO PAY GST|
|Supply of Goods||No||Yes||Supplier of Goods|
|Supply of Services||Yes||No (If aggregate turnover is within INR 20 lakhs)||Supplier of Services|
|Providing or selling of Passenger Transportation Services||Not Required||Not Required||The tax remittance should be done by the E-Commerce Operator as per the RCM or the Reverse Charge Mechanism|
|Supply of Accommodation Services||Yes||No (If aggregate turnover is within INR 20 lakhs)||E-Commerce Operator under Reverse Charge Mechanism
Once supplier is liable to take compulsory registration then they shall be liable to pay GST.
|Supply of Housekeeping Services||Yes||No (If aggregate turnover is within INR 20 lakhs)||E-Commerce Operator under Reverse Charge Mechanism
Once supplier is liable to take compulsory registration then they shall be liable to pay GST.