GST on E-commerce Operator: Registrattion, threshold limits

Last Updated On: Aug. 21, 2020, 10:51 p.m.
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GST ON E-COMMERCE OPERATORS

This article gives you a clear understanding of the GST registration requirement, GST Liability and provisions for Tax Collected at Source.

Under section 44(2) E-commerce means the “supply of goods or services” or both including digital products over the electronic network.

Every e-commerce transaction involves three parties and two types of transactions:

1. Seller;

2. Buyer;

3. E-Commerce Operator (ECO)

Types of transaction:

1. Between Seller & Buyer – Sale of Goods ;

2. Between Seller & ECO – Provision of the market place

GST shall be levied on both transactions:

Between seller & buyer: GST on the entire value of goods/ services supplied (GST shall be paid by the supplier except in case of services specified u/s9(5))

Seller & ECO: GST on commission value/ other charges earned by ECO for providing a market platform to the seller. (GST shall be paid by the ECO)

 

REGISTRATION:

  • As per the provisions of Section 22 of the CGST Act, 2017, registration under GST shall become mandatory only when the value of goods or services supplied exceeds the threshold limit (In case of Goods- Rs.40 Lakhs and in case of Services- its Rs.20 Lakhs).
  • Under Section 24 of the CGST Act,2017 contains certain supplies that are required to get compulsorily registered irrespective of the threshold limit.
  • If your services are listed in Section 9(5) of the CGST Act, then the benefit of the threshold limit shall be applicable, however, that E-commerce Operator shall be liable to pay the reverse charge mechanism.
  • Every person supplying goods or services through electronic commerce operators are required to be compulsorily registered, without any threshold exemption limit.
  • Under section 9(5), a person supplying services other than those services mentioned in this section has to compulsorily register and collect GST only if their turnover is more than the threshold limit.

Service under section 9(5) are:

  • Under all these services e-commerce operators are liable to pay GST.
  • Transportation of passengers by a radio-taxi, motorcar, maxicab and motorcycle.
  • Providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes
  • Services by way of housekeeping, such as plumbing, carpentering, etc

Commission Charged:

E-commerce portals are required to be compulsorily registered under Section 24(ix) of the CGST Act and shall be paying GST on commission on the amount received, without availing any exemption threshold limit. The tax shall be charged in the invoices raised against the supplier of goods or services, such suppliers can avail ITC on GST charged (if eligible).

Tax Collected at Source:

Provision of Tax Collected at Source (TCS) has been introduced w.e.f. 1-10-2018.Every e-commerce operator, not being an agent, should collect TCS at such rate not exceeding 1% (1% CGST + 1% SGST), of the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator. The rate for TCS is 1% for IGST for an inter-state taxable supply.

Non Applicability of TCS Provisions :

TCS provisions are not applicable where GST is payable under reverse charge. TCS provisions also do not apply in case of exempt supply.

There is no TCS if you are selling your own products through an electronic portal

 

SUMMARY: 

 

Description of Supply Threshold Limit exemption applicability Registration  Person liable to pay GST
Supply of Goods NO YES Supplier of Goods-Forward Charge Mechanism Applicable
Supply of Services Yes Yes (only when turnover exceeds Rs.20 Lakhs) Supplier of Services-Forward Charge Mechanism Applicable
Supply of Passenger Transportation Services Not required Not required E-Commerce Operator-Reverse Charge Mechanism Applicable
Supply of House Keeping Services YES Yes (only when turnover exceeds Rs.20 Lakhs) E-commerce Operator- Reverse Charge Mechanism Applicable. Once Supplier is liable to get registered, Supplier shall be liable to pay GST
Supply of Accommodation Services YES Yes (only when turnover exceeds Rs.20 Lakhs) E-commerce Operator- Reverse Charge Mechanism Applicable. Once Supplier is liable to get registered, Supplier shall be liable to pay GST

 

 

 

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