GST On Online Business Or E commerce

| 2 years ago

GST ON E-COMMERCE

Electronic commerce means the supply of goods or services or both, including digital products over digital or electronic network and Electronic commerce operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. [Section 2(44) and 2(45) CGST Act]

Example: Flipkart,  Ajio, Yatra, Urbanclap and many more.

 

Registration

GST Registration is mandatory both for e-commerce operator and supplier of goods on such platform if any. Multiple sellers can have the same additional place of business if their goods are stored in a shared facility operated by the e-Commerce operator.

Service provider on such e-commerce platform is not required to get registration if (Notification no 65/2017):

  1. Turnover doesn’t exceed 20 lakh(10 lakh in some case), or
  2. Services are covered under RCM (reverse charge mechanism)
    Example: Doctors on Practo

Composite Scheme is not available to sellers on third party E-commerce platform like Flipkart.
Read More: Who Are Required To Get GST Registration.

 

Applicable Tax 

Under GST we have 2 Sets of taxes; (i) SGST+CGST, (ii) IGST. In each transaction, any one of them needs to be charged. For determining which one of them is applicable, we need to determine Place of Supplier and Place of Supply.

Place of Supplier: It will be the state in which the supplier is registered as GST Dealer
Place of Supply    : In Case of Supply of Goods, Place of supply will be the billing address of buyer and in case of supply of services, place of supply will be the address of service recipient(if available) otherwise place of the service provider.
Note: Above are just general rules.

Which Tax To Be Charged Under GST
Place of Supply and Place of Supplier
 in same state
GST= CGST+SGST
Intra State Supply
Place of Supply and Place of Supplier
 in different state
GST= IGST
Inter State Supply

 

Invoicing

In case of supply of goods, tax invoice containing prescribed details should be issued in triplicate whereas in case of supply of services invoices should be in duplicate. In case of Supplier of exempted goods or service or both, bill of Supply should be issued.

 

Reverse Charge Mechanism (RCM) [Under section 9(5) CGST]

If any prescribed intra-state service (refer notification no 17 and 23)  is provided through an E-commerce than such E-commerce platform shall be liable to pay GST (CGST+SGST) in respect of such supplies.

E-Commerce can charge GST (CGST+SGST) from their user or consumers through  TAX invoices. In Tax invoice, e-commerce must mention that the tax is payable on reverse charge.

Following prescribed services are covered under section 9(5) of CGST Act, 2017-

  1. services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle. Example- OLA, UBER,
  2. Accommodation service in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes through a E-commerce like oyorooms.

Exception:  Where the turnover of service provider exceeds Rs.20 lakh (10 lakh for special category states) then such person needs to take registration and charge GST.

Example 1: A person provides homestay through oyorooms (E-commerce) and his turnover is Rs.8 lakh only. In this case, oyorooms shall be liable to pay GST under section 9(5) of CGST.

Example 2: Mr.Raghu provides homestay through airbnb (E-commerce) and his turnover is Rs.23 lakh only. In this case, Mr.Raghu shall be liable to get GST registration and pay GST.

 

Tax Collection at Source(TCS)

According to section 52 of CGST Act, 2017, every electronic commerce operator (Amazon), not being an agent, shall collect 1% [0.5% CGST + 0.5% SGST, or 1% IGST] of the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator.

TCS shall be paid within 10 days after the end of the month in which TCS is collected. The amount of TCS collected by the operator will be reflected in the cash ledger of the supplier which can be used to discharge GST liability.

Example: Mr. Ram sells mobile online on Amazon India. He receives an order for Rs 10,000 inclusive of tax and commission. Amazon charges a commission of Rs 200. Amazon would, therefore, need to deduct 1% tax (TCS) on the amount, including the money paid as commission (Rs. 200) and GST ( Rs. 1800 when GST @18%).

Amazon would thus be deducting tax for Rs 100 (1% of Rs. 10000). This TCS of Rs.100 will be reflected in the cash ledger of Mr.Ram.

In Case of reverse charge and non-taxable supplies, TCS should not be deducted.

😮 Attention: Applicability of TCS is not notified. It will be effective from a date to be notified subsequently, on the recommendations of the Council, by the Central Government

 

Return or statement

Return By E-Commerce Operator
Form Particulars Last Date of Filling
FORM GSTR-8 Details of supplies effected through it, including the supplies of goods or services returned through it, and the amount collected by it as TCS 10th of the next month
FORM GSTR-9 Annual Return 31st December of next financial year

 

Return By Seller on E-Commerce Platform
Form Particulars Last Date of Filling
GSTR-1 Details of outward supplies of taxable goods and/or services effected 10th of the next month
GSTR-2 Details of inward supplies of taxable goods and/or services effected claiming input tax credit 15th of the next month
GSTR-3 Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of the amount of tax. 20th of the next month

 

Relevant FAQ

Q 1: Can online seller take credit of GST paid, on commission and other fees charged by the online portals like Amazon and Flipkart.

Ans: Yes he can.

 

Source: Central Goods and Services Tax Act 2017 and Central Goods and Services Tax (CGST) Rules, 2017. CBEC

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