The laws and regulations for selling goods and services on online portals like Amazon, Flipkart, Snapdeal has undergone a lot of changes after GST implementation.
Here in this article summarized reference of all the sections, rules & notifications of GST is being given:-
1. Compulsory Registration
As per the plain reading of section 24 of CGST Act, there is a liability for Electronic commerce operator & persons selling through it to compulsorily take the GST registration irrespective of their turnover.
Let’s discuss the applicable registration provisions in detail:-
Not all persons supplying goods or services through ECO (Electronic commerce operator) are required to take registration irrespective to their turnover. In the following cases, Suppliers are not mandatorily required to take registration irrespective of turnover:-
♣ Cases where the consideration for the supplies is collected directly by the supplier and not by ECO.
♣ Where the service being supplied falls under section 9(5), 7(5), 5(5) of CGST Act, UTGST Act, IGST Act respectively that is where the liability to discharge GST is on ECO instead on original suppliers.
Central Government has come up with the following notifications making ECO liable to discharge GST liability on reverse charge for certain services:-
- Services by way of transportation of passengers by a radio-taxi, motor cab, maxi cab and motor cycle;
- Services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where the person supplying such service through electronic commerce operator is liable for registration under sub-section (1) of section 22 of the said Central Goods and Services Tax Act.
- Services by way of house-keeping, such as plumbing, carpentering etc., except where the person supplying such service through electronic commerce operator is liable for registration under sub-section (1) of section 22 of the said Central Goods and Services Tax Act.
Application for registration shall be filed by the above persons in forms mentioned below:-
| S No. | Category of Person | Form No. |
| 1 | Every electronic commerce operator who is required to collect TCS under section 52. | Form GST REG-07 |
| 2 | Persons who supply goods or services or both, other than supplies specified u/s 9(5), through such electronic commerce operator who is required to collect TCS u/s 52 | Form GST REG-01 |
| 3 | Where ECO only supplies services, tax on which to be discharged by ECO only under reverse charge. | Form GST REG-01 |
2. Composition Levy
A person who supplies goods or services through an e-commerce operator will not be eligible for registration under composition Scheme. Hence, even if the person’s aggregate turnover does not cross Rs.50 Lakhs, he/she does not have the option to become a composition tax payer.
3. Time of supply
In case of ECO selling products on its own behalf and for sellers using the portal for sales, Liability to pay tax will arise at the earlier of the following dates:
- Removal of goods for supply to the recipient, where the supply involves movement of goods
- Delivery of goods or making available thereof to the recipient, in any other case.
- The date of issue of invoice.
- The date on which the supplier receives payment with respect to the supply.
AND
For the commission income earned by ECO, Time of supply shall be earlier of the following dates:
- The date of invoice issued by ECO to the supplier if the invoice is issued within prescribed time or the date of receipt of payment, whichever is earlier; or
- The date of provision of service, if the invoice is not issued within prescribed period or the date of receipt of payment, whichever is earlier; or
- The date on which the original supplier debits the commission expense in its books in case the above provisions do not apply.
It is worth noting that the date of receipt of commission shall be the date when ECO collects payment from original buyer on behalf of supplier because ECO remits the net amount to the supplier after deducting commission and other charges.
4. Removal of goods from seller to Fulfillment center of ECO
ECO’s have their fulfillment centers which store the products and pack & deliver the orders to customers.
Seller is required to register these FC’s as their additional place of business if in same state. In case the FC is in other state, seller has to take separate GST registration making that FC as additional place of business.
Removal of goods will be through delivery challan in case delivered to FC located in same state and through tax invoice if delivered to FC located in other state.
Thus seller will be liable to pay IGST on transfer of goods to FC located in other state if place of
Supply is in that other state.
5. Place of supply
Place of supply plays an important role for the determination of which tax to be levied. Where POS is in a state other than the location of supplier, IGST will be charged .In any other case CGST & SGST will be charged in tax invoice.
- In case of commission charges collected by ECO from suppliers, Place of supply shall be the location of such supplier. Since, supplier has to register fulfillment center as its additional place of business, Location of supplier and place of supply will be the same i.e., Location of fulfillment center.
- Where the ECO is making delivery at the doorstep of customer on behalf of supplier, Place of supply would be the location of the customer and location of supplier will be fulfillment center.
- Where customer is picking goods from any other location, that other location shall be the place of supply.
Here is an example of taxable invoice to be issued by ECO to the supplier for commission.
6. TCS provisions under section 52 of CGST Act
Section 52(1) says that every electronic commerce operator, not being an agent, shall collect an amount calculated at such rate not exceeding two percent 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.
Where,
Net Value of Taxable Supplies: –
Aggregate value of taxable supplies through the operator
Less: Supplies returned
Less: Supplies under Section 9(5)
The supplier will get credit of TCS deducted in GSTR-2. The same can be used at the time of discharge of tax liability in respect of the supplies made by the actual supplier.
It is worth noting that TCS provisions will not apply in cases where tax liability is discharged by ECO under reverse charge.
Every operator is required to furnish a statement, electronically, containing the details of outward supplies of goods or services effected through it, including the supplies of goods or services returned through it, and the amount collected by it as TCS during a month within ten days after the end of such month. The statement will be filed in FORM GSTR-8. The operator is also required to file an annual statement by 31st day of December following the end of the financial year in which the tax was collected.
The details of supplies furnished by every operator in his statement for the month will be matched with the corresponding details of outward supplies furnished by the concerned supplier in his valid return for the same month or any preceding month. Where the details of outward supplies declared by the operator in his statement do not match with the corresponding details declared by the supplier, the discrepancy shall be communicated to both persons.
The amount in respect of which any discrepancy is communicated and which is not rectified by the supplier in his valid return or the operator in his statement for the month in which discrepancy is communicated shall 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 concerned 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.
