With the growth of Internet Technology and availability of smart phones, the progress in E-commerce Industry is remarkable. E-Commerce in India has become a fast and a convenient way of doing business without any barriers. Here, in this article we shall understand the concept of E-Commerce under GST, its related compliances and the recent notifications.
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Definition of E-commerce & E-Commerce Operators
As per Sec. 2(44) of the CGST Act, 2017, Electronic Commerce means supply of goods or services or both, including digital products over digital or electronic network.
As per Sec. 2(45) of the CGST Act, 2017, Electronic Commerce Operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. Ex: Amazon and Flipkart are E-Commerce operators who facilitate third party suppliers to supply goods through their (Amazon/Flipkart) online marketplace.
GST Registration for E-commerce Operators
GST Registration: E-commerce operators must obtain GST registration mandatorily, irrespective of the value of supply made by them and shall be paying GST on commission amount received from various suppliers, without availing any exemption limit.
Foreign E-Commerce operator:
Any E-Commerce operator who does not have a physical presence in the taxable territory of India is a foreign E-Commerce operator. To function in India, they have to appoint an agent on their behalf. Such operator is required to mandatorily register under GST and are also required to register in each state where operations are conducted.
These operators who are required to collect TCS have to get mandatorily registered themselves and get a separate TCS Collection Number (separate from Normal Registration).
In case any e-commerce operator does not have any physical presence in any State/UTs, the such operator can apply for registration based on their registered head office address.
When is E-commerce Operator liable to pay GST?
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:
- Between the supplier and buyer for the supply of goods or services and
- Between the supplier and E-Commerce operator for a commission charged, for the use of the marketplace.
GST is charged on both these transactions by the E-Commerce Operator. However, 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:
| S. No. | Description 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.) |
| 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 |
| 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 |
Collection of TCS under E-commerce:
An e-commerce operator shall collect TCS @1% (0.5% as CGST & 0.5% as SGST) on the net value of taxable supplies made through online marketplace. The TCS collected shall be paid to the government on or before the 10th of the next month.
On the other hand, TCS deposited by the e-commerce operators shall appear in the GSTR-2A of the portal of suppliers and the suppliers can then use such TCS through claiming such TCS by filing return. The TCS collected shall be reported in Cash Ledger of the Supplier.
GST Returns by E-Commerce operator:
An E-Commerce operator files GSTR-1 and GSTR-3B every month. In addition to this, an E-Commerce operator is required to submit an electronic statement called GSTR-8. This statement contains the 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 called GSTR-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.
Considering, the era of digital economy and several compliances related to GST, CBIC has vide its various notifications allowed suppliers to supply goods through E-Commerce Operators without having registration under GST or having registration under composition scheme. However, CBIC has listed conditions/ procedures to be followed by the e-commerce operators in respect of such suppliers. The notifications shall come into effect from 01st October, 2023. The same is reproduced below:
Notification No. 34/2023- Central Tax dt 31st July,2023:- CBIC notifies waiving of the mandatory GST Registration Requirement for persons supplying goods through Electronic Commerce Operator
Under this notification, persons making supplies of goods through ECOs, who have an aggregate turnover within the specified limit, are exempted from GST registration. To avail such exemption, certain conditions are required to be fulfilled.
1. such persons shall not make any inter-State supply of goods;
2. such persons shall not make supply of goods through electronic commerce operator in more than one State or Union territory;
3. such persons shall be required to have a Permanent Account Number issued under the Income Tax Act, 1961 (43 of 1961);
4. such persons shall, before making any supply of goods through electronic commerce operator, declare on the common portal their Permanent Account Number issued under the Income Tax Act, 1961 (43 of 1961), address of their place of business and the State or Union territory in which such persons seek to make such supply, which shall be subjected to validation on the common portal;
5. such persons have been granted an enrolment number on the common portal on successful validation of the Permanent Account Number declared as per clause (iv);
6. such persons shall not be granted more than one enrolment number in a State or Union territory;
7. no supply of goods shall be made by such persons through electronic commerce operator unless such persons have been granted an enrolment number on the common portal; and
8. where such persons are subsequently granted registration under section 25 of the said Act, the enrolment number shall cease to be valid from the effective date of registration.
Notification No. 37/2023- Central Tax, Dt 04th August, 2023:– Special procedure to be followed by the electronic commerce operators in respect of supplies of goods through them by unregistered persons
As per this notification, Electronic Commerce Operators shall:
1. allow the supply of goods through it by the said person only if enrolment number has been allotted on the common portal to the said person;
2. not allow any inter-State supply of goods through it by the said person;
3. not collect tax at source under sub-section (1) of section 52 in respect of supply of goods made through it by the said person; and
4. Furnish the details of supplies of goods made through it by the said person in the statement in FORM GSTR-8 electronically on the common portal.
Where multiple electronic commerce operators are involved in a single supply of goods through electronic commerce operator platform, “the electronic commerce operator” shall mean the electronic commerce operator who finally releases the payment to the said person for the said supply made by the said person through him.
Notification No. 36/2023- Central Tax dt 04th August, 2023:- Special procedure to be followed by the electronic commerce operators in respect of supplies of goods through them by composition taxpayers
As per this notification, Electronic Commerce Operators shall:
1. not allow any inter-State supply of goods through it by the said person;
2. collect tax at source under sub-section (1) of section 52 of the said Act in respect of supply of goods made through it by the said person and pay to the Government as per provisions of sub-section (3) of section 52 of the said Act; and
3. furnish the details of supplies of goods made through it by the said person in the statement in FORM GSTR-8 electronically on the common portal.
Conclusion: E-commerce has become an integral part of modern business, and its regulatory landscape has been evolving. With mandatory GST registration for operators and various compliance requirements, E-commerce operators must stay updated with the latest guidelines and notifications to ensure seamless operations and compliance with GST regulations.
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In case of any observations or clarifications, the author can be reached at [email protected]
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Are there any other compliances such as return filling or anything that are required to be perform by the supplier after obtaining enrolment ID ?