Understand the GST registration process for e-commerce operators and sellers, including tax collection, TCS, input tax credit, invoicing, liability, compliance, and record-keeping. Explore TCS return filing, TDS applicability, rates, certificates, return filing, and payment for e-commerce transactions.
1. GST Registration for E-commerce Operators and Sellers:
- E-commerce operators: If you operate an e-commerce marketplace that facilitates the supply of goods or services, you are required to obtain GST registration, regardless of your turnover. This registration allows you to collect and remit GST on behalf of the sellers using your platform.
- E-commerce sellers: As an e-commerce seller, you need to register under GST if your annual turnover exceeds the prescribed threshold. For most states, the threshold is ₹40 lakh for the supply of goods (₹20 lakh for some northeastern states) and ₹20 lakh for the supply of services.
2. Tax Collection at Source (TCS):
- As an e-commerce operator, you are required to collect tax at source (TCS) on the net value of taxable supplies made by sellers through your platform. The TCS rate is currently 1%.
- The collected TCS amount should be deposited to the government and reported in your GST returns. The amount collected is reflected as credit in the electronic cash ledger of the respective seller.
3. Input Tax Credit (ITC):
- Sellers registered under GST can claim input tax credit (ITC) on the GST paid on their purchases, such as raw materials, inventory, or services used for their business.
- To claim ITC, sellers need to ensure that the invoices from their suppliers comply with the prescribed GST requirements.
4. Tax Invoicing:
- E-commerce operators and sellers need to issue proper tax invoices for all taxable supplies made through their platforms. The tax invoices should include specific details such as the GSTIN (GST Identification Number) of the operator/seller, customer details, description of goods/services, tax rates, and amounts.
- Invoices issued by e-commerce operators should clearly indicate that the supply is made by the seller on the platform.
5. Tax Liability and Payment:
- Sellers are responsible for determining their tax liability based on the applicable tax rates (based on the goods or services they supply) and reporting it in their GST returns.
- Sellers need to file regular GST returns, such as GSTR-1 (for outward supplies) and GSTR-3B (for monthly summary returns), and pay the tax liability within the prescribed due dates.
6. Compliance with E-way Bill Requirements:
- E-way bills need to be generated for the movement of goods beyond certain threshold values, as prescribed by the GST laws.
- E-commerce operators and sellers need to comply with e-way bill requirements for inter-state transactions to ensure the seamless movement of goods.
7. Maintenance of Records:
- E-commerce operators and sellers are required to maintain proper records of their transactions, including invoices, purchase records, and other relevant documents, as specified under the GST laws.
- Records should be retained for a period of at least six years from the end of the financial year in which the transactions are recorded.
e-commerce operators are required to collect Tax Collection at Source (TCS) on behalf of sellers who conduct transactions through their platforms. The TCS is collected at a specified percentage (currently 1%) of the net value of taxable supplies made by sellers. E-commerce operators must file TCS returns to report and reconcile the TCS collected during a particular period. Here are the key details regarding TCS returns in an e-commerce business:
Frequency of TCS Return Filing:
E-commerce operators are required to file TCS returns on a quarterly basis.
The return period covers the transactions and TCS collected in a particular quarter, i.e., April to June, July to September, October to December, and January to March.
Form for TCS Return Filing:
The TCS return is filed using Form GSTR-8, which is specifically designed for e-commerce operators to report the TCS collected.
Due Date for TCS Return Filing:
The due date for filing the TCS return for a particular quarter is the 10th day of the month following the end of that quarter.
For example, the return for the quarter from April to June is due by the 10th of July.
Information to be Provided in TCS Return:
The TCS return (Form GSTR-8) requires e-commerce operators to furnish the following details:
- GSTIN (Goods and Services Tax Identification Number) of the e-commerce operator.
- Aggregate TCS collected during the quarter.
- GSTINs of the sellers on whose behalf TCS is collected.
- Value of taxable supplies made by sellers.
- TCS amount collected from each seller.
Other relevant details as required by the form.
TCS Payment:
Along with filing the TCS return, the e-commerce operator is also required to deposit the TCS amount collected from sellers to the government.
The TCS payment needs to be made electronically through the authorized GST portal.
Reconciliation with Seller’s GSTR-2A:
Sellers can view the TCS details reported by the e-commerce operator in their GSTR-2A, which is an auto-populated form reflecting inward supplies.
Sellers can reconcile the TCS reported in the e-commerce operator’s GSTR-8 with their own GSTR-2A to ensure accuracy.
1. Applicability of TDS in E-commerce:
- TDS provisions apply to e-commerce operators if their total sales, gross receipts, or turnover exceeds the prescribed threshold during the financial year.
- The threshold for TDS applicability is ₹10 crore for e-commerce operators as per the Finance Act, 2020.
2. Nature of Payments for TDS Deduction:
- E-commerce operators need to deduct TDS on payments made to sellers or service providers for the supply of goods or services facilitated through their platforms.
- The TDS provisions apply to both intra-state (within the same state) and inter-state (across different states) transactions.
3. TDS Rates and Threshold Limit:
- The applicable TDS rate for e-commerce transactions is 1% of the net payment made to the seller or service provider.
- TDS should be deducted if the annual payment made to a seller or service provider exceeds ₹50 lakh during the financial year.
4. TDS Certificate (Form 16B/16C):
- E-commerce operators are required to issue TDS certificates to the sellers or service providers from whom TDS has been deducted.
- Form 16B is issued for TDS on the sale of goods, while Form 16C is issued for TDS on the provision of services.
- These certificates provide sellers or service providers with the necessary details of TDS deducted, which they can use for claiming credit while filing their income tax returns.
5. TDS Return Filing:
- E-commerce operators need to file periodic TDS returns to report the TDS deductions made.
- The TDS return is filed using Form 26Q, which includes details of the TDS deductions, such as the PAN of the deductee, the amount deducted, and other relevant information.
- The TDS return should be filed on a quarterly basis within the due dates specified by the Income Tax Department.
6. TDS Payment:
- The TDS amount deducted by the e-commerce operator should be deposited to the government within the due dates specified by the Income Tax Department.
- E-commerce operators are required to make TDS payments electronically through the authorized online portal.
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Author is A Practicing Chartered Accountant with over 5 years of rich experience in Company Law, Audits, Accounts & taxation. She is keen in streamlining business accounts of the Company and provide Business advisory services She can be connected on sweta@caswetamakwana.com or on 9819244185.
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