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The COVID-19 epidemic has had a huge impact on the Indian economy, resulting in one of the world’s greatest lockdowns. The Indian internet economy, which was formerly one of the most appealing markets in the world, saw a sharp decrease in the month of April 2020 as a result of the shutdowns. However, when Indian consumers migrated online to meet their everyday requirements, the epidemic aided growth in industries including online education, e-commerce, e-healthcare, and online payments. As a result, understanding the various business models of e-commerce enterprises is critical. In this article, we will discuss the Analysis of E-Commerce Operators in GST.
Key Abstract
GST is particularly appealing to e-commerce businesses since the model GST law includes a Tax Collection at Source (TCS) system. E-commerce has been defined as “the supply of goods and/or services, including digital items, through a digital or electronic network” under GST.
Although GST unites many indirect taxes and e-commerce enterprises would not have to worry about state governments charging an entry tax on items sold online or VAT on warehouse non-declaration, etc., the anticipated tax collection has left e-commerce companies uneasy.
It is ideal to discuss the E-Commerce Companies in India before we shall move into our topic on the Analysis of E-Commerce Operators in GST.
The E-Commerce Business in India
The buying and sale of products and/or services via electronic means such as the internet is referred to as E-Commerce. E-Commerce refers to any type of online commercial transaction. Online shopping is the most common example of E-Commerce, which is defined as the purchasing and selling of items through the internet on any device. E-Commerce, on the other hand, can include a variety of activities such as online auctions, payment gateways, online tickets, and internet banking.
Section 2(44) of the CGST Act 2017 defines e-commerce as “the delivery of goods or services or both, including digital items, through a digital or electronic network.” It is simply the purchasing or selling of things via the Internet, but it is also crucial to understand where an e-commerce operator does not have a physical presence in the taxable region.
E-commerce Platform Types
The following are the many types of E-Commerce platforms:
- E-commerce operator/marketplace (for example, Flipkart, Amazon): An entity that owns, runs or administers a digital or electronic facility or platform for E-commerce.
- Suppliers/aggregators on an e-commerce platform: An entity that provides goods or services on an e-commerce platform.
Meaning of an E-Commerce Operator or E.C.O
Any individual who owns operates or maintains a digital or electronic facility or platform for E-Commerce activity is referred to as an E-Commerce operator. Amazon and Flipkart, for example, are E-Commerce operators that enable third-party sellers to supply items through their (Amazon/Flipkart) online marketplace. However, if Amazon and Flipkart sell their own products on this platform, they are not considered E-Commerce operators. They should also have a GST e-commerce HSN code.
Obligation on an E-Commerce Operator or E.C.O to obtain GST Registration
According to the terms of the CGST Act, 2017, E-Commerce businesses must get GST Registration regardless of the value of their supply.
A foreign E-Commerce operator is one who does not have a physical presence in India’s taxable territory. To operate in India, they must employ an agent on their behalf
Every foreign E-Commerce operator is obliged to get GST registration. Furthermore, they must be registered in each state and union territory where their operations take place. As a result, it is critical for operators to get internet commerce operator GST registration.
It should be noted that foreign E-Commerce providers will be required to collect tax at source (TCS) on goods made through their marketplace.
Anyone who sells products, services, or both through an E-Commerce operator is also required to register under the terms of the CGST Act 2017. Persons providing specific services (as defined in Table A below) may, however, take advantage of the mandated threshold limit as stipulated in notifications issued by the relevant Tax Authorities.
Payment of GST by E-Commerce Operator or E.C.O
An E-Commerce transaction involves three parties: the provider, the customer, and the E-Commerce operator. There are two separate transactions for which GST requirements apply:
- Between the provider and the buyer for the provision of products or services and
- For the usage of the marketplace, a commission is payable between the provider and the E-Commerce operator.
Both of these transactions are subject to GST on e-commerce operators. Certain specified transactions announced under Section 9(5) of the CGST Act 2017 and Section 5(5) of the IGST Act 2017 require the E-Commerce Operator to pay the GST on behalf of the suppliers:
| Sl. No. | Description of Supply 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 |
Concept of Tax Collected at Source and Liability of E-Commerce Operator or E.C.O for its Collection
TCS is an abbreviation for Tax Collection at Source. When the buyer pays consideration (in an E-Commerce transaction) and the E-Commerce provider collects it, the E-Commerce operator is obligated to collect tax at source (TCS) at the rate of 1% of the net value of taxable supply made through the online marketplace. The term ‘net value of taxable supplies’ refers to the entire value of taxable supplies of goods or services, or both, fewer returns of items to suppliers made within the same calendar month via the E-Commerce Portal.
Buyers frequently return purchased products in E-Commerce. If a supplier’s sales returns exceed their sales in a calendar month, the E-commerce operator under GST is not obligated to collect tax at source.
This shortage will not be carried forward or rectified in the next calendar month. The time restriction for remitting TCS to the government (by E-Commerce operators) is 10 days from the end of the calendar month in which such sums were collected. The remittance is should be made in cash rather than using the Input Tax Credit available in the computerized credit ledger.
Filing of Returns by the E-Commerce Operator
Every month, an E-Commerce business, like all other taxpayers, submits GSTR-1 and GSTR-3B. In addition, an E-Commerce operator must file an electronic declaration known as GSTR-8. This statement should include information on outward supplies of products and/or services provided by suppliers via its marketplace, net of returns, as well as the TCS for the calendar month. GSTR-8 forms must be submitted within 10 days of the end of the applicable calendar month. The E-Commerce operator must also file an annual return known as GTSR-9B by the 31st of December after the end of the fiscal year in which the transactions occurred, and the tax is collected at the point of sale.
The information provided by E-Commerce Operators in GSTR-8 must match the information supplied by the relevant suppliers in GSTR-1, which is filed every month. If the information given does not match, the discrepancy should be disclosed to the appropriate persons by the other. If the E-Commerce Operator or the supplier fails to correct the returns, the output tax liability due to the mismatch will be charged in the following calendar month, plus interest at the rate of 18% per year (Section 50(1) of the CGST Act, 2017).
Important Points for Consideration
The following are the important points for consideration for an E-Commerce Operator:
- When tax officials intend to get information on supply or stock details from E-Commerce operators, a notice may be issued by any officer not lower than the level of Deputy Commissioner, and such details must be supplied by the E-Commerce operator within 15 days of the date of the notice’s issuance.
- It is possible that suppliers will keep their items at a warehouse run by an E-Commerce Operator. The warehouse must be registered as an extra place of business by the supplier. If the supplier possesses the necessary documentation, such as a lease agreement, there is no restriction on the same warehouse being registered as an additional place of business.
- When a supplier sells exempted or zero-tax items through an E-Commerce operator’s marketplace, no tax is collected at the source since the net taxable value of the goods is Nil.
- TCS requirements do not apply when GST is paid through the reverse charge technique.
- If the provider offers their items through their electronic portal, TCS is not required.
- Under the composition model, an E-Commerce operator is not permitted to accept the registration.
- TCS regulations do not apply to goods or services imported.
Endnote
Though GST compliance has grown for the E-commerce business, it still benefits local suppliers because they may sell in any state with the same tax rates. This will encourage more suppliers to go online and deliver the most satisfactory services possible to their clients. Furthermore, every little start-up will have a massive market opportunity if they do business through the e-commerce industry.
Through its qualified personnel, CAGMC offers you a high level of satisfaction and quick delivery of GST-related services, as well as better dealing with government requirements.
