prpri E-commerce under GST regime E-commerce under GST regime

E-Commerce under gst regime

As the Commerce of Goods and Services moves Online with a Fast Pace in a COVID-19 World it is intriguing how the new indirect tax regime would be able to deal with these transactions. The Aim is not only to capture and tax these transactions easily and fairly but to also distribute the State component (SGST/IGST) of these transactions to the correct State. It may be noted that SGST ITC Credit is State Specific and cannot be used to offset the SGST Liability in another State of India.

Definitions under GST Law:

Electronic Commerce has been defined in Sec. 2(44) of the CGST Act, 2017 to mean the supply of goods or services or both, including digital products over digital or electronic network. Electronic Commerce Operator (ECO) has been defined in Sec. 2(45) of the CGST Act, 2017 to mean any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.


It has to be done in the From GST REG-07 and has to be granted in three days if no objections are found by the Proper Officer. The Entire process is electronic and faceless for the Taxpayer.

The benefit of Turnover threshold exemption (Net Annual  Turnover of Rs.20 Lacs for Service Providers) , as per Section 24(x) of the CGST Act, 2017 ,is not available to e-commerce operators and they are liable to be registered irrespective of the value of supply made by them. This requirement is, however, applicable only if the supply is made through such ECO who is required to collect tax at source under section 52 of the CGST Act, 2017.ECO Operators would then have to file GSTR-8 Return monthly.


As per Section 52 of the GST Act, ECO Operators are required to collect 1% (0.5%CGST/0.5%SGST) (intra-state) or 1% IGST ((inter-state))of the total Transaction Value when the supply is made through their digital platform. The Tax authorities want to tap into the tax base of the huge number of vendors who are supplying both service and goods through online platforms. TCS Mechanism helps in easy collection of tax from this vast world in a simple manner. The TCS collected would be available in the Cash Ledger of the GST Registered Vendors and can be used by them to offset this Cash Ledger against their GST Liability.

Note- ECO has to pay the TCS through Cash and not ITC Ledger but the Vendors can obtain Refund of the Cash Ledger Balance obtained from TDS/TCS Mechanism by application through their Online GST Account.

Specified Services under Section 5(5) of CGST/IGST Act:

Levy and Collection of TCS Tax by ECO has been exempted for Specified Services as per Section 5(5) of the GST Law. Three Services have been specified till now for exemption from TCS:

1. Transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle:

Notification No. 17/2017-Central Tax (Rate) dt 28th June, 2017 and

IGST Notification No. 14/2017-Integrated Tax (Rate) dt 28th June, 2017

2. Providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes:

Notification No. 17/2017-Central Tax (Rate) dt 28th June, 2017 and

IGST Notification No. 14/2017-Integrated Tax (Rate) dt 28th June, 2017

3. Services by way of house- keeping, such as plumbing, carpentering etc:

Notification No. 23/2017-Central Tax(Rate) dated 22nd Aug, 2017 Corresponding Notification No. 23/2017-Integrated Tax (Rate) dated 22nd Aug, 2017

Transactions in ECO Marketplace:

Transactions in ECO MarketplaceAs per Section 52 of the GST Act, The Tax Authorities need to reconcile the Annual or Monthly/Quarterly Returns filed by the Registered Vendors and the ECO. In the event of Non-Reconciliation, the method of the Notice and Reconciliation has yet to be provided. Hecne we see that even the ECO has to work with their Vendors to ensure that their Returns are correct and congruent with what is filed by them.

Export by E-Commerce Operators :

We have the provision of exports by ECOs through the office of Foreign Post Offices (FPO).  The Procedure for Export through FPOs in GST Era has been detailed in CBI&C circular No. 14/2018-Cus dated 4-6-2018.They have to file the Declaration is to be filed in PBE-1 (Postal Bill of Export -I). For small vendors, they can file combined Declaration is to be filed in PBE-2 (Postal Bill of Export -II) as per the process given in circular No. 18/2018-Cus dated 13-06-2018. For the purpose of GST, data will be captured and uploaded through an off-line utility (ICAN) provided by DG(Systems). It is clarified that till such time that computers with ICAN facility are installed and operationalised, exporters will be free to follow the procedure contained herein.

It maybe noted that if the exporter wishes to claim the Merchant Export Incentive Scheme (MEIS) as per para 9.17A of the Foreign Trade Policy 2015-20, he/she should make the export only through the Foreign Post Offices  of Delhi, Mumbai or Chennai.The process of filing the PBE-1 declaration is still done manually. In case , MEIS Benifit is not being claimed , the export would be goverened by the “Export by Post Regulations 2018”.Here, along with the PBE-1 Form , a CN 22/23 Declaration has to be made to the Customs authority by the exporter.

It maybe noted that as per circular No. 18/2018-Cus dated 13-06-2018,  in case of single payments are received by exporters from e-commerce portal companies through normal banking channels for multiple shipments addressed to multiple consignees is now permitted under Postal Bill of Export-II.

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August 2021