In the existing VAT, service tax and excise legislation, there are no specific provisions for e-commerce operators to pay taxes on sale of goods or to make any tax deductions from the payments being made by them to actual seller of goods. However, many states, under their VAT law have started prescribing returns to be filed by the e-commerce operators with information relating to the supplies made through their portal In order to mitigate the challenges being posed by e-commerce transactions, the Model GST Law (MGL) endeavors to establish a compliance mechanism to ensure that the appropriate taxes are discharged by the actual suppliers supplying goods or services through electronic portals. The pivotal point from where this can be ensured is the E-commerce operator.

2.  Treatment of supplies through e-commerce mode:

2.1 Many models are in vogue for making supplies through e-commerce route. Most common models are ‘inventory model’, ‘market place model’, ‘fulfillment model’, ‘hybrid model’ and ‘aggregator model’, etc. A distinction has been made between the supplies of goods or services being made under various models.

2.2 Section 43B(e) of the MGL defines an Electronic Commerce Operator (Operator) as every person who owns, operates or manages an electronic platform which is engaged in facilitating the supply of any goods and/or services. Also a person providing any information or any other services incidental to or in connection with such supply of goods and services through electronic platform would be considered as an Operator. A person supplying goods/services on his own account, however, would not be considered as an Operator. For instance, Amazon and Flipkart are Operators because they are facilitating actual suppliers to supply goods through their platform, however, Titan supplying watches and jewels through its own website would not be considered as an Operator for the purposes of this provision. Similarly Amazon and Flipkart will not be treated as Operators in relation to those supplies which they make on their own account.

2.3  The GST provisions relating to supplies through e-commerce mode prescribe the obligations for Operators facilitating supplies by actual suppliers; actual supplier supplying goods or services through Operators; supplies through e-commerce mode on own account; supplies of branded services by aggregators and powers and obligations of the government under the MGL. The following discussion elaborates these obligations and powers.

3. Obligations in respect of supplies made through e-commerce route:

3.1 All supplies of goods and / or services, whether through e-commerce route or otherwise, are subject to payment of CGST & SGST if the supplies are treated as intra­state supplies or payment of IGST if the supplies are treated as inter-state supplies in terms of section3 and 3A of the IGST Act respectively. The suppliers are eligible for the benefit of threshold exemption provided in the MGL. Section 19 r/w Schedule-III of the MGL, however, provides that the threshold exemption is not available to inter alia following categories of suppliers:

(i)   person making inter-state supplies;

(ii) person supplying goods and / or services, other than branded services, through e-commerce Operator;

(iii)  every electronic commerce Operator;

(iv)  aggregator providing branded services under his brand name or trade name.

3.2   It may be seen that the actual supplier of goods and / or services and e-commerce operator making supplies of goods and / or services on his own account would be liable to discharge liability of GST in respect of supplies made by them and they are even not eligible for any threshold benefit either. They are liable to comply with all the obligations cast on normal suppliers under MGL / IGST Act like obtaining registration, payment of GST, filing of periodical returns, etc.

3.3  A separate category of supplier of branded services has also been provided in the MGL. The aggregator providing a branded service under his brand name or trade name would be responsible for payment of GST instead of the actual supplier of service. This concept has been borrowed from the present service tax law. Companies like Ola, Uber would get covered under this provision. Section 43(a), 43(c) and 43(b) of the MGL defines aggregator, branded services and brand name / trade name respectively..

4.  Obligations of Operator in respect of supplies made by actual suppliers:

4.1 Under Section 43C(1) of the MGL, the Operator is required to collect (i.e. deduct) an amount out of the consideration paid or payable to the actual supplier of goods or services in respect of supplies of goods and / or services made through such Operator. The Government, on the recommendation of the GST Council, would specify the rate for such collection (deduction). The timings for such collection/deduction are earlier of the two events:

(i) the time of credit of any amount to the account of the actual supplier of goods or services;

(ii) the time of payment of any amount in cash or by any other mode.

This provision casts an obligation on the Operator to collect an amount at the given rate out of the proceeds payable to the actual supplier of goods or services making supplies through it.

4.2          The amount so collected by the Operator is to be paid to the credit of appropriate government within 10 days afte  the end of the month in which amount was so collected / deducted. Further, the Operator is required to file a Statement containing all amounts collected by him for the supplies made through his Portal within 10 days of the end of the calendar month to which such statement pertains. The said statement would contain the names of the supplier(s), details of respective supplies made by them and the amount collected on their behalf. The Form and Manner of the said Statement would be prescribed in the GST Rules.

4.3  It may be noted that the Operator is broadly responsible to collect/deduct the specified percentage of amount out of the proceeds payable to the actual suppliers, pay such amount to the government and file a statement containing respective details. The time available to the Operator to deposit the collected amount on behalf of suppliers and to file the respective Statement containing the details of such collection is 10 days after the end of the month to which such collection relates. Further, the Operator is responsible to provide the information sought by the Government relating to the details of the supplies made by the actual suppliers using his Portal.

5. Obligations of actual suppliers making supplies through the Operators:

5.1  The suppliers on whose behalf payments have been made to the Government by the Operator after making deductions out of the amount collected on account of their supply proceeds, would be entitled to claim credit of such amount in their respective electronic cash ledger.

5.2  The details of supplies contained in the statements submitted by the Operator would be matched with the information contained in the periodical returns submitted by the actual suppliers and the discrepancy, if any would be notified to both Operator as well as actual supplier. In case of any discrepancy, the actual supplier need to rectify that in the same month in which the discrepancy is communicated, and this should be reflected in the return filed for that month. In case such rectification is not made within the same month, the amount of discrepancy shall be added to the output liability of the actual supplier for the next calendar month in the prescribed manner. The said liability is to be paid by the actual supplier along with interest from the date when such tax was due.

6. Powers of Government:

6.1          An officer not below the rank of Joint Commissioner may require the Operator to furnish details relating to:

(i) supplies of goods / services effected through the Operator during any period;

(ii) stock of goods held by actual supplier making supplies through such Operator in the godowns or warehouses belonging to the Operator and registered as additional place of business by the actual supplier.

 6.2 The Operator is required to furnish the above information within 5 working days from the date of service of notice asking such information. In case of failure to furnish such information, the penalty could be extended to Rs. 25,000/- .

7. Conclusion:

 7.1 In sum, the e-commerce operators facilitating supplies by actual suppliers would be required to collect TCS on such supplies besides being liable for paying GST as supplier of services rendered in relation to such supplies, while those making supplies on their own account or the aggregators making supplies of branded services would be liable to discharge the GST liability as suppliers of goods or services.

 7.2 It may be noted that as far as e-commerce operators are concerned, no tax liability has been imposed upon them in respect of supplies made by actual suppliers through them except for the liability to discharge tax on the services rendered in relation to such supplies. Their obligation is restricted to provide information to the government regarding the details of supplies made by the actual suppliers and to deduct and deposit a percentage of taxes from the collection payable to the said suppliers.



1.   Section 43B: E-commerce related definitions

2.  Section 43C: TCS

3.  Section 3(4): Supply of a branded service by an aggregator

4.  Section 7: Levy and collection of CGST / SGST

5.  Section 9: Taxable person

6.  Section 19 r/w Schedule – III (para 5(i), (viii), (ix) & (x): Categories of persons who are required to get registered notwithstanding the general provisions relating to threshold

7. Section 3 & 3A of IGST Act: Nature of supply

8. Section 4 of IGST Act: Levy and collection of IGST

9. Section 5 of IGST Act: Place of provision for goods

10. Section 6 of IGST Act: Place of provision for services

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