E-Commerce is defined under section 2(44) of the CGST Act 2017 as “the supply of goods or services or both, including digital products over the digital or electronic network”. It is essentially an activity of buying or selling of products over the Internet, but it is also necessary to know where an e- commerce operator does not have a physical presence in the taxable territory. We will discuss the various aspects of E Commerce Operator under GST example below:
Apart from this in this article we'll also discuss HSN code for ecommerce operator, service provided by e commerce operator, who is e commerce operator under GST and all service provided by e commerce operator and much more.
|Who Is An E-Commerce Operator?|
|Is It mandatory For An E-Commerce Operator To Obtain GST Registration?|
|When Is The E-Commerce Operator Liable To Pay GST?|
|What Is TCS? When Is The E-Commerce Operator Liable To Collect Tax At Source?|
|How Can The Suppliers Claim Credit Of The TCS?|
|Which Returns Are Required To Be Submitted By The E-Commerce Operator?|
|Matching Concept In E-Commerce Transactions|
|Points To Remember|
An E-Commerce operator is any person who owns, operates, or manages a digital or electronic facility or platform for E-Commerce activities. Example: Amazon and Flipkart are E-Commerce operators who facilitate third party suppliers to supply goods through their (Amazon/Flipkart) online marketplace. However, if Amazon and Flipkart were to supply their own goods on this platform, then they do not come under the definition of E-Commerce operator. They should also have HSN code for e commerce under GST.
Every foreign E-Commerce operator is required to obtain registration under GST mandatorily. Furthermore, they are also required to be registered in each state and union territory where their operations are conducted. Hence it is important for operators to come in e commerce operator under GST registration. Note: Foreign E-Commerce operators would also be liable to collect tax at source (TCS) on supplies done through their marketplace.
An E-Commerce transaction is undertaken between three parties, i.e., the supplier, the buyer, and the E-Commerce operator. For the applicability of GST provisions, there are two distinct transactions:
GST is charged on both these transactions. There are certain specified transactions notified under section 9(5) of the CGST Act 2017 and section 5(5) of the IGST Act 2017, where the E-Commerce Operator is required to pay the GST on behalf of the suppliers (Table A):
|Sl. No.||Description of Supply of Specified Service||Supplier of service|
|1||Transportation of passengers by a radio-taxi, motor cab, maxi cab, and motorcycle||Any person (Individual, HUF, etc.) (Notification No. 17/2017- Central Tax (Rate) dated 28th June 2017)|
|2||Providing accommodation in hotels, inns, guest houses, clubs, campsites, or other commercial places meant for residential or lodging purposes||Any person, except those who are liable to obtain registration under section 22(1) of the CGST Act (Notification No. 17/2017- Central Tax (Rate) dated 28th June 2017)|
|3||House-keeping, such as plumbing, carpentering etc||Any person, except those who are liable to obtain registration under section 22(1) of the CGST Act (Notification No. 23/2017- Central Tax (Rate) dated 22nd August 2017)|
Let us look at a few examples (Table B):
|Sector||E-Commerce Operators||Supplier Registration||Who is liable to pay GST?|
|Sale of Goods||Flipkart, Amazon||Supplier is required to obtain GST registration mandatorily.||Supplier (Example: Nike, Adidas)|
|Hotel Aggregator||OYO, MakeMyTrip||Registration required only if the turnover of the Hotel is more than INR 20 Lakhs (INR 10 lakhs for special category states)*||Hotel – if Hotel is registered under GST E-Commerce Operator – If Hotel is not registered under GST|
|Cab Aggregator||Uber, Ola||Registration required only if car owners’ turnover is more than INR 20 lakhs (INR 10 lakhs for special category states)*||Cab Aggregator – irrespective of whether the car owner is registered under GST or not|
|Housekeeping Services Aggregator||UrbanClap, HouseJoy||Registration required only if the turnover of the Service Provider is more than INR 20 lakhs (INR 10 lakhs for special category states)*||Service Provider – if Service Provider is registered under GST E-Commerce Operator – If Service Provider is not registered under GST|
* Refer Section 22(1) of the CGST Act, 2017. Note: Turnover limit for registration in case of sale of goods has been revised to INR40 lakhs in Notification No. 10/2019-Central Tax dated 7th March 2019
TCS stands for Tax Collection at Source. Where consideration is paid by the buyer (in an E-Commerce transaction) and is collected by the E-Commerce supplier, the E-Commerce operator is required to collect tax at source (TCS) at the rate of 1% of the net value of taxable supplies made through the online marketplace. ‘Net value of taxable supplies’ means the total value of taxable supplies of goods or services or both, reduced by the returns of goods to the suppliers during the same calendar month, through the E-Commerce Portal. It is common in E-Commerce for buyers to return the goods that have been purchased. In case the sales returns for a supplier are more than the sales in a calendar month, then the E-Commerce operator is not required to collect tax at source. Note: This shortfall shall not be carried forward nor adjusted in the next calendar month. The time limit to remit the TCS to the Government (by E-Commerce operators) is 10 days from the end of the calendar month in which such amounts were collected. The remittance is to be done in cash and not via input tax credit available in the electronic credit ledger.
TCS deposited by E-Commerce operators will appear in GSTR-2A ‘Part C’ on the GST Portal of the Suppliers. The Suppliers can use this TCS credit to discharge their GST liability.
An E-Commerce operator files GSTR-1 and GSTR-3B similar to other taxpayers every month. In addition to this, an E-Commerce operator is required to submit an electronic statement called GSTR-8. This statement should contain details of outward supplies of goods and/or services delivered by suppliers through its marketplace, net of returns, along with the TCS during the calendar month. GSTR-8 should be submitted within 10 days from the end of the relevant calendar month. The E-Commerce operator is also required to file an annual statement/return called GTSR-9B by the 31st of December following the end of the financial year in which the transactions have taken place, and the tax is collected at source.
The details reported by E-Commerce operators in GSTR-8 is required to match the details reported by the respective suppliers in GSTR-1 filed every month. In case the particulars provided do not match, the discrepancy should be communicated to the respective parties by the other. If the E-Commerce Operator or the supplier does not rectify the returns, then, the output tax liability due to the mismatch will be payable in the subsequent calendar month along with interest at the rate of 18% p.a. (Section 50(1) of the CGST Act, 2017).