GST for E-Commerce Operators: TCS, 9(5) & Compliance Guide

GST implications on an e-commerce operator?

Under the Indian GST framework, an Electronic Commerce Operator (ECO) has significant and distinct compliance obligations. The primary implications include mandatory registration under Section 24(x) of the CGST Act, 2017, irrespective of turnover. The ECO's tax liability is bifurcated: firstly, the obligation to collect Tax at Source (TCS) under Section 52 on the net value of taxable supplies made through its platform by other suppliers; and secondly, a direct liability to pay GST on certain notified services under Section 9(5), where the ECO is deemed to be the supplier.

For TCS, the applicable rate is 0.50% (0.25% CGST + 0.25% SGST/UTGST) or 0.50% IGST, effective from July 10, 2024. This is levied on the "net value of taxable supplies," which excludes services covered under Section 9(5). For services notified under Section 9(5), the ECO is liable to pay the entire GST, and the actual supplier is absolved of this liability. Compliance for ECOs is stringent, mandating the filing of a monthly statement in FORM GSTR-8 and an annual statement in FORM GSTR-9B. Special procedures are also prescribed for handling supplies from composition dealers and unregistered persons.

Detailed Explanation

The GST implications for an Electronic Commerce Operator (ECO) are multifaceted, encompassing registration, tax collection, direct tax liability, and specific compliance requirements.

1. Definition and Registration

• Electronic Commerce Operator (ECO): As per Section 2(45) of the CGST Act, 2017, an ECO is any person who owns, operates, or manages a digital or electronic facility or platform for electronic commerce.

• Mandatory Registration: Section 24(x) of the CGST Act mandates compulsory registration for every ECO, regardless of their aggregate turnover. This registration is required in each State/UT where the ECO has operations. If an ECO does not have a physical presence in a particular State/UT, it can declare its Head Office as the place of business for registration purposes in that state.

2. Tax Collection at Source (TCS) under Section 52

The primary obligation for an ECO is the collection of tax at source on supplies made through its platform.

• Applicability: An ECO is required to collect TCS on the consideration collected by it on behalf of the suppliers making supplies through its platform. This provision does not apply to services notified under Section 9(5).

• Net Value of Taxable Supplies: TCS is calculated on the "net value of taxable supplies." As per the explanation to Section 52(1), this is defined as:

• The aggregate value of taxable supplies of goods or services (or both) made by all registered persons through the ECO.

• Less: The aggregate value of taxable supplies returned to the suppliers during the same month.

• Excluding: Services notified under Section 9(5) of the CGST Act.

• Rate of TCS: The Government has notified the following rates for TCS:

Reference: Notification No. 2/2018-Integrated Tax, as amended by Notification No. 1/2024-Integrated Tax.

3. Direct Tax Liability under Section 9(5)

For certain specified services, the GST law shifts the liability to pay tax from the actual service provider to the ECO.

• Deeming Provision: Section 9(5) of the CGST Act empowers the government to notify categories of services where the tax on intra-state supplies shall be paid by the ECO as if it were the supplier of such services.

• Notified Services: As per Notification No. 17/2017-Central Tax (Rate) (as amended), the following services fall under this provision:

1. Passenger Transport Services: Services by way of transportation of passengers by a radio-taxi, motorcab, maxicab, motorcycle, or omnibus (unless the omnibus operator is a company).

2. Accommodation Services: Services by way of providing accommodation in hotels, inns, guesthouses, etc., except where the supplier is liable for registration under Section 22(1) (i.e., exceeds the turnover threshold).

3. House-keeping Services: Services like plumbing, carpentering, etc., except where the supplier is liable for registration under Section 22(1).

4. Restaurant Services: Supply of restaurant services, other than those provided by restaurants in specified premises.

For these services, the ECO is liable to pay the full GST amount and must issue an invoice. The actual supplier is not liable for GST, and consequently, the ECO does not collect TCS on these transactions.

• Judicial Interpretation (AAR): In the case of Uber India Systems (P.) Ltd., In re (AAR Karnataka) [(2024) 24 CENTAX 118 :: (2025) 92 GSTL 202], it was held that an entity is liable under Section 9(5) if the services are supplied "through" its platform. The AAR clarified that the term "through" implies the entire facilitation of the service from beginning to end via the platform. The liability under Section 9(5) is a deeming fiction and is not contingent on the ECO collecting the consideration from the end customer.

4. Compliance and Reporting Requirements

ECOs are subject to specific monthly and annual filing obligations.

• FORM GSTR-8: Every ECO must furnish a monthly statement in FORM GSTR-8 by the 10th of the subsequent month. This statement contains details of outward supplies of goods or services made through the platform and the TCS collected.

• FORM GSTR-9B: An annual statement must be filed in FORM GSTR-9B by the 31st of December following the end of the financial year.

• Payment of TCS: The amount of TCS collected must be deposited with the government within ten days after the end of the month in which it was collected.

• Consequences of Non-Compliance: Failure to collect/pay TCS attracts interest under Section 52(6). Additionally, a penalty under Section 122(vi) may be levied.

5. Special Provisions for Suppliers on the Platform

Recent notifications have introduced special procedures for certain categories of suppliers operating through ECOs.

• Suppliers Exempt from Registration:

• As per Notification No. 34/2023-CT, persons supplying goods through an ECO with an aggregate turnover below the registration threshold are exempt from obtaining GST registration, subject to certain conditions (e.g., no inter-state supplies, PAN-based enrolment).

• ECO's Obligation (Notification No. 37/2023-CT): In such cases, the ECO shall not collect TCS on supplies made by these exempt persons. The ECO must, however, report these supplies in FORM GSTR-8.

• Composition Dealers:

• The Finance Act, 2023, amended Section 10 to permit composition dealers to supply goods through an ECO.

• ECO's Obligation (Notification No. 36/2023-CT): When a composition dealer supplies goods through an ECO, the ECO is required to collect TCS under Section 52. The ECO must not allow any inter-state supply by such a person.

6. Scenario with Multiple ECOs

In a transaction involving multiple ECOs, the responsibility for TCS lies with the operator who ultimately makes the payment to the supplier. For instance, if a customer books a service via ECO-1, which routes it through ECO-2 who has the direct agreement with the supplier, ECO-2 will be liable to collect TCS as it releases the final payment to the supplier.