India was ranked 8th in terms of revenue generated through e-commerce market and its growth in the year 2020.[1] The onwards trend in e-commerce market has immense potential to become a game changer for the Indian economy. It is expected to reach 200 Billion USD in the year 2027[2], which in itself speaks volume about the importance of e-commerce in India.

While the importance of the electronic market place i.e. e-commerce is not going to diminish any time in the near future, it’s treatment under the domestic tax laws is a matter of great bewilderment. The GST regime has increased the complexity in understanding the e-commerce system in India.

This article is an attempt to demystify the complexity in determining what constitutes an e-commerce operator and e-commerce in a broader sense. Further, the author will attempt to simplify the treatment of e-commerce under GST by way of this article.

E-commerce Global Business Digital Marketing Concept


The World Trade Organization defines e-commerce as “production, distribution, marketing, sale or delivery of goods and services by electronic means”.[3]

The OECD has defined the term e-commerce transaction as “the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders. The goods or services are ordered by those methods, but the payment and the ultimate delivery of the goods or services do not have to be conducted online. An e-commerce transaction can be between enterprises, households, individuals, governments, and other public or private organisations. To be included are orders made over the web, extranet or electronic data interchange. The type is defined by the method of placing the order. To be excluded are orders made by telephone calls, facsimile or manually typed e-mail.”[4]

Several other definitions provided by different authorities in India are as follows:

Department for Promotion of Industry and Internal Trade (DPIIT), FDI Policy, 2017 defines e-commerce as “buying and selling of goods and services, including digital products over digital and electronic network”. [5]

Ministry of Electronics and Information Technology (MeitY) has defined e-commerce as “a type of business model, or segment of a larger business model, that enables a firm or individual to conduct business over an electronic network, typically the internet. Electronic commerce operates in all four of the major market segments: business to business, business to consumer, consumer to consumer and consumer to business.”[6]

The Consumer Protection Act, 2019 sought to look at e-commerce from the perspective of a consumer and defined it as “buying or selling of goods or services including digital products over digital or electronic network.”[7]

The common key points of all these definition stresses on the ‘buying and selling of goods or services over the internet”. In India, the buying and selling activity is regulated by the Goods and Service Tax (hereinafter referred to as the GST), in terms of taxation. Therefore, it is pertinent to study how the e-commerce market is perceived by the GST regime.

The Central Goods and Service Tax Act, 2017[8] defines the term “electronic Commerce” under section 2(44) as “the supply of goods or services or both, including digital products over digital or electronic network.”

E-commerce operations can be fundamentally categorized as follows:

Business to Business (“B2B”) Like Best Price, Walmart etc.
Business to Consumers (“B2C”) Flipkart, Amazon, Myntra etc.
Consumer to Consumer (“C2C”) OLX, Quickr, ebay etc.
Consumer to Business (“C2B”) Upwork, Freelancer etc.

There are further categorizations of e-commerce operations, which more or less are based on the modes stated above.

The models that e-commerce generally operates on are:

1. Market based model

2. Inventory model

3. Direct sales model

4. Fulfillment model

5. Managed marketplace model

6. Hybrid model[9]

From the definitions provided hereinabove, it can be concluded that in essence, e-commerce is a form of business operation that provides services or goods through an electronic channel irrespective of the kind of goods or services that are being offered.

This brings us to our next question: who is an e-commerce operator?

The section 2(45) of the CGST Act, 2017 defines “electronic Commerce operator” or what is otherwise known as e-commerce operator as “any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.”

While dealing with the matter involving a taxi cab service provider through a mobile application, the Appellate Authority for Advance Ruling (Goods and Service Tax), Karnataka had to determine whether the said services by the appellant (web application owner) would fall under the category of ‘e-commerce operator’. The tribunal was of the view that the answer would be in affirmative since the appellant was providing services to both the customers and the taxi drivers using an IT based platform that would generate invoice in favour of the taxi driver, payable by the consumer. The relevant excerpt of the said order has been provided below:

“The Appellant on the other hand has developed a digital platform which aggregates the taxi drivers on one common platform. The service of transportation of passengers is supplied by the taxi drivers using the digital application developed by the Appellant. The Appellant manages the digital application which facilitates the supply of the service of transportation of passengers.

Further, the appellant owns and operates the IT platform for the supply of service of transportation of passengers over the digital network. Using this digital network facility the Appellant provides the taxi aggregation service wherein they connect both the customer as well as the taxi operator. The customer would book the taxi by using the IT platform provided by the Appellant and the taxi operator would be intimated about the potential customer through the same IT platform. Finally on completion of the service Appellant sends an invoice to the customer through the digital network facility which is payable by the consumer to the taxi driver. Therefore the appellant M/s. OPTA Cabs Pvt. Ltd. is an “electronic commerce operator” in terms of the definition given in Section 2(45) of the CGST Act.”

In Re: Opta Cabs Pvt. Ltd.  (04.12.2018 – AAAR  – Karnataka) : KAR/AAAR/Appeal-04/2018 dated 04-12-2018

It must be borne in mind that the levy of GST is on the ‘supply’ of goods and services and does not get affected by the channel used for such a supply. In the initial attempts at drafting the GST law, the Model GST Law had provided for a distinction between aggregator and ‘e-commerce operator’. It intended to refer to e-commerce operators as those who are merely the platform players. However, the distinction was later done away with and the definition of e-commerce operator was extended to cover all e-commerce players under it. The current stand is that irrespective of what type of e-commerce platform you operate, you will fall under the category of an e-commerce operator.[10]


To simplify the taxation under the GST regime, the following table has been made.

Disclaimer: the table is only for representation purposes and an interpretation of the author’s understanding of law. It shouldn’t be understood as a legal/financial advice.

Entities involved 1.  Seller

2.  Facilitator

3. Buyer

1. Seller

2. Buyer

GST Registration Mandatory Mandatory
TCS Registration Mandatory Not required

For all transactions routed through e-commerce operators, the section 9(5) of the CGST Act, 2017 dictates that the it is the liability of the e-commerce operator to pay the tax under GST.

According to Section 52 of the GST Act, 2017, TCS is mandated to be collected on the ‘net value of taxable supplies’[11] made through a website/portal by other suppliers where the consideration is to be collected by the e-commerce operator at the rate of 1%. However, as seen in the case mentioned above (in re: Opta Cabs Pvt. Ltd.), even when the consideration is collected by the supplier directly, the e-commerce operator is bound to deduct TCS.

In cases where the e-commerce platform is used to sell the products of the operator itself, TCS is not required to be collected. Those transactions will however be liable to GST at the prevailing rates. TCS is also not mandated for supply of exempted goods and services.

It is also pertinent to mention at this point that the threshold limit exemptions are not made available to e-commerce operators as under Section 24(ix) of the CGST Act, 2017. One exception to this rule being is that in case where it is the liability of the e-commerce operator to pay tax on behalf of the suppliers under a notification issued under section 9 (5) of the CGST Act, 2017, such suppliers are allowed to make use of the threshold exemptions.


GST law is a relatively new law and is undergoing changes. The complexities involved in an e-commerce transaction coupled with the changing interpretations of GST regime render it difficult to understand. An e-commerce operator involves in several transations on a daily basis. For the convenience of reporting and tracking the supply, the government has attempted to provide a comprehensive structure of taxation under GST. Every attempt has been made to simplify the concept hereinabove.


[1] The E-commerce market in India, EcommerceDB,,

[2] Market size of e-commerce industry across India from 2014 to 2018, with forecasts until 2027, Statista,

[3]Work Programme on Electronic Commerce, 1998, World Trade Organisation,

[4] Glossary, OECD,

[5] DPIIT,

[6] E-commerce, Ministry of Electronic and Information Technology,

[7] Section 2(16) of the Consumer Protection Act, 2019

[8] The CGST Act, 2017 is in consonance with the SGST Act, 2017 and the UTGST ACT, 2017 with minor differences not applicable to the present discussion.

[9] Sumit D. Majumdar, GST And E-Commerce, National Law School of India Review, Vol. 28, No. 2, pp. 123-133, (2016)

[10] Majumdar, Supra note 9

[11] Aggregate value of goods or services, or both.


DISCLAIMER: The thoughts expressed in this article are author’s own and should not be construed as a legal/financial advice.

Author Bio

Qualification: LL.B / Advocate
Company: N/A
Location: Bhopal, Madhya Pradesh, India
Member Since: 30 Sep 2021 | Total Posts: 1

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