E-commerce Operators: GST updates

An E-commerce Operator under GST must register compulsorily under Section 24(x) of the CGST Act, regardless of turnover. For notified services under Section 9(5) - cabs, restaurant supply, accommodation, housekeeping - the operator pays GST on the supplier's behalf. For other supplies, the operator collects 1% TCS on the net value of taxable supplies and files monthly GSTR-8 by the 10th of the following month, along with GSTR-1, GSTR-3B and the annual GSTR-9B by 31 December.

Mayank Wadhera

Published: 24 Aug 2023

Updated: 16 May 2026

4 min read

With Union Budget 2026 reinforcing the formalisation push for online commerce, GST compliance for E-commerce Operators (ECOs) is more granular than ever. ECOs not only run digital marketplaces but also collect TCS, discharge GST on notified specified services, and report unregistered seller supplies. Marketplaces like Amazon, Flipkart, Zomato, Ola and Urban Company - and a growing list of D2C and quick-commerce platforms - need a current map of their obligations under the CGST Act, 2017.

Who Qualifies as an E-commerce Operator

Section 2(45) of the CGST Act defines an Electronic Commerce Operator as any person who owns, operates or manages a digital or electronic facility or platform for electronic commerce. Section 2(44) treats supply of goods, services or digital products over digital networks as electronic commerce. Anyone running a marketplace falls within scope, whether the seller is registered or not.

Compulsory GST Registration for ECOs

Under Section 24(x) of the CGST Act, every ECO must obtain GST registration irrespective of aggregate turnover. The ₹40L goods and ₹20L services thresholds (₹10L for special states) do not apply. Foreign ECOs without a physical presence appoint an Indian representative under Section 14 of the IGST Act for OIDAR services and register separately for TCS collection.

Section 9(5): Specified Services Where ECO Pays GST

For notified categories, the ECO discharges GST on behalf of the underlying supplier:

Passenger transport - radio taxis, cabs, motorcycles (e.g., Ola, Uber, Rapido)
Accommodation services from unregistered suppliers (e.g., Airbnb hosts)
Housekeeping services like plumbing, carpentry from unregistered providers (e.g., Urban Company)
Restaurant services supplied through ECOs (e.g., Zomato, Swiggy) other than from specified premises

The underlying supplier of these services need not register unless they cross threshold for their own taxable supplies outside the ECO.

TCS under Section 52: The 1% Rule

For supplies other than Section 9(5), the ECO collects Tax Collected at Source at 1% on the net value of taxable supplies (0.5% CGST + 0.5% SGST, or 1% IGST for inter-state):

Net value = aggregate value of taxable supplies less returns
TCS must be deposited by the 10th of the following month
Filed in monthly Form GSTR-8
Annual statement in GSTR-9B by 31 December following the financial year
TCS credited to the supplier's electronic cash ledger after GSTR-8 acceptance

Reliefs for Unregistered and Composition Sellers

Notifications 34/2023 and 37/2023-Central Tax allow unregistered persons to supply goods through ECOs without GST registration if they operate within a single State, have a valid PAN, do not undertake inter-state supply, and obtain an enrolment number on the GST portal. For composition taxpayers under Section 10, supply through ECOs is permitted intra-state, with TCS applicable and details reported in GSTR-8. These reliefs have significantly expanded MSME participation on marketplaces.

Returns and Audit Trail

Every ECO files:

GSTR-1 - outward supplies, by the 11th of the following month
GSTR-3B - summary return and tax payment, by the 20th of the following month
GSTR-8 - TCS statement, by the 10th of the following month
GSTR-9 and GSTR-9C - annual return and reconciliation, by 31 December
GSTR-9B - annual TCS statement specific to ECOs

Reconciliation between supplier-side GSTR-1, ECO-side GSTR-8 and supplier GSTR-2A/2B is now an automated check; mismatches trigger scrutiny notices under Section 61.

Cross-Border E-commerce and OIDAR Services

Foreign digital service providers selling to Indian consumers - over-the-top streaming, software subscriptions, e-books, online advertising and cloud services - fall within the Online Information Database Access and Retrieval (OIDAR) regime under Section 14 of the IGST Act. They must register under simplified OIDAR registration (Form GST REG-10), discharge IGST at 18% on B2C supplies to non-taxable online recipients, and file Form GSTR-5A monthly. Where the recipient is a registered Indian business, the recipient discharges IGST under reverse charge.

For Indian sellers exporting through e-commerce, supplies qualify as zero-rated under Section 16 of the IGST Act, allowing either refund of accumulated ITC or supply under Letter of Undertaking (LUT) without payment of tax. Marketplace operators facilitating exports must comply with shipping bill cross-references, EDPMS reconciliation with banks, and timely realisation of export proceeds to maintain zero-rating status under FEMA.

Conclusion

In 2026, ECOs sit at the intersection of three GST roles: regular taxpayer, deemed supplier under Section 9(5), and TCS deductor. Build robust seller onboarding KYC, automate TCS computation, file GSTR-8 on time, and reconcile against supplier returns every month. Marketplaces that get GST plumbing right convert it into a competitive moat with sellers, buyers and the regulator alike.

Frequently Asked Questions

Is GST registration mandatory for all e-commerce operators?

Yes. Under Section 24(x) of the CGST Act, every e-commerce operator must obtain GST registration irrespective of turnover. The standard thresholds of ₹40 lakh for goods and ₹20 lakh for services do not apply. Foreign e-commerce operators without an Indian presence must appoint a representative and obtain separate TCS registration in each state of operation.

What is the TCS rate for e-commerce operators in 2026?

E-commerce operators collect TCS at 1% on the net value of taxable supplies (0.5% CGST plus 0.5% SGST for intra-state, or 1% IGST for inter-state). Net value is the aggregate value of taxable supplies less returns. The TCS must be deposited by the 10th of the following month and reported in monthly Form GSTR-8.

Can unregistered sellers sell through e-commerce platforms?

Yes, with conditions. Under notifications 34/2023 and 37/2023-Central Tax, unregistered persons can sell goods through e-commerce operators if they operate within a single State, hold a valid PAN, do not make inter-state supplies and obtain an enrolment number on the GST portal. This relief has significantly expanded MSME participation in online retail.

Which services fall under Section 9(5)?

Notified categories include passenger transport by radio taxi, cab or motorcycle (Ola, Uber), accommodation services from unregistered suppliers, housekeeping like plumbing or carpentry from unregistered providers, and restaurant services supplied through e-commerce operators other than from specified premises. The operator discharges GST on behalf of the supplier for these services.