The introduction of the Goods and Services Tax (GST) in India has significantly transformed the taxation landscape, streamlining the tax structure and unifying the country's indirect taxes. For e-commerce businesses, compliance with GST regulations is crucial to operate legally and avoid penalties. In this article, we will explore the key aspects of GST compliance for e-commerce businesses in India.

What is an E-commerce Seller?

E-commerce sellers are individuals or businesses that sell goods or services through online platforms or electronic networks. They operate in the digital realm, reaching customers across geographical boundaries. E-commerce sellers can include individuals, small businesses, or large enterprises.

Eligibility to Register under GST

The applicability of GST to e-commerce sellers varies depending on whether they supply goods or services.

1. GST is applicable on a supplier of goods, and there’s no turnover threshold for exemption available for such sellers.

1. For a supplier of services, GST is only applicable if their turnover exceeds Rs 20 lakh.

1. Suppliers of services mentioned under section 9(5) of the CGST Act are exempt from GST. These include:

1. Passenger transportation providers through e-commerce operators like Uber, Ola, etc.

1. Hotel service providers through aggregator platforms like Yatra.com, etc., except where the service provider is liable for registration under Section 22(1) of the CGST Act

1. Providers of housekeeping services such as plumbing, carpentry, etc., through aggregator platforms such as Urban Company, etc., except where the supplier is liable for registration under Section 22(1) of the CGST Act.

1. Restaurant service providers other than the services provided by restaurants, eating joints, etc., that are located at specified premises. Specified premises offer hotel accommodation with a declared tariff value exceeding Rs.7,500 per unit per day or equivalent.

The above category for sellers to whom GST is applicable must register under GST as a registered seller. Also, such a person needs to register themself as a regular taxpayer. A person selling goods or services through an e-commerce operator cannot register under the composition scheme.

Applicability of TCS to e-Commerce Sellers

e-Commerce operators like Amazon, Flipkart, Snapdeal, etc., are required to collect tax at source at 1% on the value of supplies made the e-commerce suppliers at the time of making payment to them. The e-commerce operator would levy the TCS and then pass it on to the government.

The e-commerce seller will receive payment after deduction of TCS at the rate of 1%, and such TCS has to be claimed as credit by the e-commerce seller while filing their GST returns.

Applicability of TDS to e-Commerce Sellers

e-Commerce operators are required to deduct tax at source at 1% on the gross sales amount of an e-commerce seller at the time of credit to its account or at the time of payment to such seller, whichever is earlier. The e-commerce operator isn’t required to deduct TDS if the e-commerce supplier’s gross amount of sale of goods or services, or both in the previous year, doesn’t exceed Rs.5 lakh.

Further, the e-commerce seller must furnish their PAN or Aadhaar to the e-commerce operator. If the e-commerce seller does not furnish his PAN or Aadhaar to the e-commerce operator, TDS would be deducted at 5%. No TDS will be deducted in case the e-commerce seller is a non-resident.

Returns for E-commerce Sellers

E-commerce sellers have specific GST return filing requirements based on their turnover and nature of transactions. The key returns that e-commerce sellers need to file are as follows:

1. GSTR-1: E-commerce sellers must file GSTR-1, which contains details of outward supplies made during the reporting period. It includes information about B2B and B2C transactions, invoice details, and HSN/SAC codes.

1. GSTR-3B: E-commerce sellers need to file GSTR-3B, a monthly summary return, by providing details of their outward and inward supplies, input tax credit (ITC) availed, and the tax liability.

1. GSTR-9/9C: E-commerce sellers with an annual turnover exceeding Rs. 2 crores (or Rs. 5 crores for GSTR-9C) need to file the annual return GSTR-9, which provides a consolidated view of their transactions throughout the year. GSTR-9C is a reconciliation statement that requires certification by a chartered accountant.

1. GSTR-8: E-commerce operators need to file GSTR-8, which is a return containing details of TCS collected and the corresponding TCS certificates issued to sellers.

Ensuring GST compliance is vital for e-commerce businesses in India to maintain legal operations, avoid penalties, and foster a positive business environment. By understanding the various aspects of GST compliance, such as e-commerce seller eligibility, provisions of Tax Collection at Source (TCS), and the necessary returns to be filed, businesses can effectively navigate the GST framework and contribute to their growth while fulfilling their tax obligations. Regular updates and consultations with tax professionals can help businesses stay up-to-date with any changes in GST regulations and ensure ongoing compliance.

 

 

Created & Posted by Pooja

Income Tax Expert at TAXAJ

 

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