Registration, Applicability, Liability, TCS for E-Commerce Operator & Transactions under GST
What is E-Commerce?
According to the CGST Act, “electronic commerce” means the supply of goods or services or both, including digital products over digital or electronic network.
In simple words, it is a supply which is aided by an online network.
E – commerce which didn’t even exist two decades back, has now become an important pillar for the economy as it has revolutionized spending and living habits of people.
Who is an E-Commerce Operator?
According to the CGST Act, “electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.
E commerce operators are India’s biggest drivers of technology. Companies such as Amazon, Flipkart, Uber, Ola, MakeMyTrip, PayTM to name a few, have changed the way people transact in the country.
Why are e-commerce transactions treated differently in GST?
Let us first understand how basic GST works in simple words.
- For instance, A sells goods to B. Now B will pay the invoice amount + GST to A. A in turn is liable to pay the GST collected from B to the Government. Generally, the supplier collects GST from the recipient and remits the same to the Government (except RCM cases).
- Now let us understand how an e-commerce transaction works.
For instance, an individual wanting travel, might use the services of say, OLA. He would book a cab using the OLA app. Now the individual is the service recipient while the cab driver is providing travel services, is the service supplier. Now in this situation, the cab driver (being the supplier) may not be able to remit GST to the government as he being a single individual with a small turnover may not be registered under GST. The liability to remit the GST to the government in such cases falls upon a third party – the e-commerce operator (in this case – OLA)
- As the liability to remit GST to the government falls on a third party and not the supplier, e-commerce transactions have separate provisions under GST.
Registration and Eligibility
- Every e-commerce operator irrespective of his turnover, is required to be compulsorily registered under the CGST Act.
- Person supplying goods/services/both other than supplies specified under Section 9(5), through e-commerce operator who is required to collect tax at source is required to be compulsorily registered under the CGST Act (irrespective of his turnover)
- Person supplying goods/services/both through e-commerce operator who is not required to collect tax at source is required to be registered under the CGST Act (only if his turnover exceeds the threshold limit of Rs 10 lakhs/20 lakhs)
Is the E-commerce operator liable to pay GST?
The liability to pay GST to the Government lies with the E-commerce operator, only for services notified under Section 9(5) of CGST Act, 2017
Can an E-commerce operator avail the benefit of Composition levy?
Person engaged in making any supply of goods through an e-commerce operator who is required to collect tax at source under section 52 cannot take registration under composition scheme of Section 10.
Is an E-commerce operator required to take State wise registration if his business is spread within different states?
E-Commerce Operator is required to obtain GST Registration in each State, If he has suppliers in different States. However, he can indicate his head office as place of business and file all the returns through HO, if he does not have place of business in that State.
What will be the Place of Supply for recharge facilities?
Place of supply for e-commerce operator for recharge of talk time of the Telecom Operator, recharge of DTH or recharge in relation to convenience fee charged from the customers on booking of air tickets, rail supplied through its online platform shall be the address on record of the customer with the supplier of services.
What are specified services u/s 9(5) of CGST Act?
We read many a times above about Services notified under Section 9(5) of CGST Act. Let us obtain an understanding as to what they actually are:-
|Sr No||Description of Service||Supplier of Service||Person Liable to pay GST|
|1||Transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle||Any Person||E – commerce operator|
|2||Providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes||Any person except who is liable for registration under section 22(1) of the CGST Act||E – commerce operator|
|3||Services by way of house- keeping, such as plumbing, carpentering etc||Any person except who is liable for registration under section 22(1) of the CGST Act||E – commerce operator|
What is Tax Collection at Source (TCS)
- Every e-commerce operator, not being an agent is required to collect an amount at the rate of 1% (0.5% CGST + 0.5% SGST) of the net value of taxable supplies made through it. The amount so collected is called TCS.
- TCS by e-commerce operator shall be on billing basis and not on collection basis.
- An e-commerce company is required to collect tax only on the net value of taxable supplies. Therefore if there are any returns to the e-commerce operator, then, the value of supplies which are returned are adjusted in the aggregate value of taxable supplies.
- If in a particular month, the sale returns are more than supplies made, there will be no TCS for that month. However, such negative figure will not be carried forward.
Will TCS be applicable if I sell my goods through a website hosted by me?
- TCS is required to be collected on the net value of taxable supplies made through it by other suppliers where the consideration is to be collected by the E-commerce operator.
- Where an individual is selling goods through his own portal, no TCS will be applicable.
Within how much time should the E-commerce operator make such collection?
The e-commerce operator should make the collection during the month in which the consideration amount is collected from the recipient.
Within how much time should the E-commerce operator remit the TCS to the Government?
The e-commerce operator should remit the TCS to the Government within 10 days through the Electronic Cash Ledger only after the end of the month in which amount was so collected
In what situations will TCS not be applicable?
- Where GST is paid under reverse charge
- Where supplies are exempt
- Import of goods or services
What Returns are to be filed by the E-commerce operator?
- Every e-commerce operator is required to file an Annual Statement before 31st December of the following financial year.
- Every e-commerce operator is also required to furnish a Statement in Form GSTR 8, electronically within 10 days after the end of the month in which the amount was collected.
How does the Concept of Matching work in e-commerce transactions?
- Details of supplies and amount collected which is provided by the e-commerce operator is matched with the corresponding details of outward supplies furnished by the concerned supplier in his valid return.
- If any discrepancy is communicated and the same is to be corrected and communicated by the supplier or the e-commerce operator in their statements for the month in which discrepancy is communicated.
- If the same is not done, then the amount is to be added to the output liability of the said supplier in his return for the month succeeding the month in which the discrepancy is communicated.
- The supplier in whose output tax liability any amount has been added, shall be liable to pay the tax payable in respect of such supply along with interest on the amount so added from the date such tax was due till the date of its payment.