GST Goods and Services Tax is an indirect tax imposed by the Indian government to replace all other indirect taxes in place at the time, such as Sales Tax, Service Tax, Excise Duty, and so on. GST is a tax that is mainly imposed on the sale of specific goods and services and is levied across the whole country of India. The buying and sale of products and services via electronic means such as the internet is e-commerce. Any online commercial transaction is referred to as e-commerce. Online shopping, which is defined as the purchasing and selling items through the internet on any device, is the most well-known example of E-Commerce.
In India, GST has a significant influence on eCommerce. With more and more commerce online, the government has created unique GST laws and regulations that eCommerce businesses must follow. This article will examine some of the frequently asked questions about GST that we’ve received from online companies
Who has to pay GST in E-Commerce?
In the tax system, we may argue that everyone in the market, from the producer to the consumer, should pay GST when they sell goods or services that are subject to it. The producer will be liable for paying GST on the raw materials utilised in the manufacturing process and used in the production process. When the manufacturer or distributor arrives at the store, they must make value additions on which the retailer will pay the GST to the manufacturer or distributor. Finally, the customer will acquire the products or use the services they will be required to pay GST at the rates set out in the GST Acts now in effect.
GST in E-Commerce
Regardless of the supply value made by an e-commerce operator (as specified above), they must register for GST.
GST registration for those selling through e-commerce operators: All members who make supplies through e-commerce websites are required to register for GST, regardless of the value of the supply. Regardless of who owns the websites or the items delivered, the firm should register for GST registration.
Services marked Under Section 9(5) of the 2017 CGST Act: The e-commerce operator is liable for paying tax on behalf of the suppliers if services are notified under Section 9(5) of the CGST Act, 2017. The Act’s requirements apply to the e-commerce operator as if he were the service provider if such services are given through its platform.
Registration Requirement of E-Commerce Operator
By virtue of section 24, e-commerce firms are required to register for GST, regardless of the value of the supplies they make. This implies that an e-commerce operator cannot benefit from the threshold exemption available to other business owners until their total value of supplies made in a year does not reach a pre-determined level as stated by the GST Law.
GST for Suppliers Under E-Commerce Operator
Suppose a person offers goods or services or both through an e-commerce operator. In that case, they must also register for GST, regardless of the value of the supply, according to section 24(ix) of the CGST Act. However, it should be emphasised that this will only apply if the collection is made through an e-commerce operator that is obligated to collect TCS under section 52 of the CGST Act.
On the other hand, if the e-commerce operator distributes the items in his name, the supplier to e-commerce operators can take advantage of the GST Act’s threshold limit. However, the e-commerce operators would not be eligible for the same threshold exemption as suppliers. As if they were the supplier of such services, the e-commerce operator will be obliged to pay tax on supplies mentioned under section 9(5) of the CGST Act and are given through their platform.
GST Registration for Foreign E-Commerce Operator
A foreign e-commerce operator must register for GST in each state or union territory (UN) where it operates and is obligated to collect TCS on such supplies. If the oversees e-commerce platform or operator does not have a physical presence in the state or Union Territory, they must designate an agent to represent them.
Tax Collected at Source (TCS)
TCS (tax collected at source) is a system through which an e-commerce operator collects a portion of the tax when a provider provides the needed goods or services through its site. TCS deducts 1% of the net value of goods or services provided via an e-commerce operator, implying that an e-commerce operator should deduct 1% of the net worth of taxable supply.
The e-commerce operator will collect the TCS for supplies gathered from customers and transfer them to the genuine provider. The e-commerce operator must pay the government within ten days of the end of the month after the invoice’s creation date.
When filing a GSTR-2 return, TCS will be available as a credit.
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Should E-Commerce Operators Register with GST?
Yes, regardless of sales volume, all e-commerce firms are required to register for GST. As a result, all eCommerce operators must register for GST before starting their business or within 30 days.
Levy and Collection of GST
In an e-commerce transaction, three parties are often involved: the buyer, the seller, and the e-commerce operator, who offers the platform where the buyer and seller meet to place orders, purchase items, or receive services. GST will be charged on all transactions between the customer and seller and any transactions between the seller and the e-commerce operator for making the platform available, whether it is paid as a commission or in any other way.
Once the details of the supply made by the supplier through an e-commerce operator have been collected, remitted, and filed, a matching of the components of outward supplies made by the supplier who is registered under the GST law will be carried out to summarise any difference or discrepancy that must be rectified, which if not corrected will result in additional demand of tax liability from the concerned official.
Does E-Commerce Operator Require to File GST Returns?
Yes, online businesses must file GSTR-8 and a GST yearly report every month. Ecommerce operators must explain the outward supply of goods or services made by sellers using the platform and the amount of TCS collected in the monthly GSTR-8 return.