Introduction

Electronic commerce or EC is buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet. GST has a noticeable impact on each and every sector including E commerce sector.

There can be two types of E commerce sellers:

1. E commerce operator/ marketplace (e.g. Flipkart, Amazon etc): It is an entity which owns, operates or manages digital or electronic facility or platform for E commerce.

2.Suppliers on E commerce platform: It is an entity which supplies goods or services on/through an E commerce platform.

Impact of GST on E commerce

Advantages and disadvantages of GST for E commerce:

ADVANTAGES DISADVANTAGES
GST will replace 17 indirect taxes which will reduce the cost and provide a common market. Dual control on every business by central and state government.
Standard tax rates for each product, bringing offline sellers to the same level in terms of costing and pricing. States may loose autonomy to change their tax rates.
TCS will be handed over as collection towards GST to the government Retail businesses may oppose because their taxes will go up.
E commerce will be effectively used in all the states. Small businesses may find it difficult to use the online connectivity with GST network.
Logistics, inventory costs will fall and reduction in number of warehouses. Service sector may oppose because they have to register in every state they want to cater.

Return Filing under GST for E commerce

Particulars E commerce operator Suppliers on E commerce platforms
Meaning

It is a person who owns, operates or manages digital or electronic facility or platform for electronic commerce.

It is a person who supplies goods or services on an e-commerce platform.

Registration

All E commerce operators are mandatorily required to get registration under GST irrespective of their turnover.

All suppliers on E commerce platforms are mandatorily required to register under GST including even those E commerce suppliers whose aggregate turnover does not exceed the threshold limit for registration.

E commerce marketplace sellers have been excluded from availing benefit of composition scheme.

Return Filing

By 10th of every month, an E commerce operator has to furnish FORM GSTR-8 containing details of outward supplies made through their platform by suppliers in the previous month.

By 10th of every month, suppliers have to furnish the details of their outward supplies through E commerce platforms in Table 4, 5 and 7 of FORM GSTR 1.

By 15th of every month, a supplier has to furnish FORM GSTR 2, in which the details of tax collected by the E commerce operator can be accepted or modified from GSTR 2A which is auto populated from FORM GSTR 8.

By 20th of every month, he shall file return and discharge his tax liability on supply of goods through Electronic Cash or Credit Ledger.

Limitations

  • Huge number of invoices have to be uploaded in the software.
  • The details of supplies and the amount collected during a calendar month and furnished by every operator in his statement should be matched with the details of outward supplies furnished by the concerned seller in his valid return filed for the same calendar month or any preceding calendar month.
  • If the above do not match within a reasonable time, then the supplier would be liable to pay tax along with interest.

Comparison

GST will affect customers across states –

  • IGST (integrated goods and service tax) will be levied on inter-state sales
  • Once the goods reach and cross state borders, there will be relatively less verification and no entry tax will be charged. This will reduce the price for the customer.
  • Selling from another state and within state both will be equally simple to the buyer.
  • Seller need not to invest in excess infrastructure like branches or warehouses for the sole purpose of operational efficiency.
BEFORE GST UNDER GST
When Radha raises the invoice:

Product price = Rs. 5000

CST @2% = Rs. 100

Final price = Rs. 5100

In addition, the dealer in Jaipur needs to bear entry tax @2% = Rs. 102

Total cost to the dealer in Jaipur = Rs. 5202

When the dealer in Jaipur will sell jeans to the customer locally, she/he will sell the shoes at Rs. 5202+ profits.

Since credit of CST and entry tax is not allowed

When Radha raises the invoice:

Product price = Rs. 5000

IGST @18% = Rs. 900

Final price = Rs. 5900

When the dealer in Jaipur will sell jeans to the customer locally, he/she will sell the shoes at Rs. 5000+ profits.

Since credit of IGST is allowed, and is not passed on to the end customer.

TCS Provisions for E commerce operator

Rate of TCS under GST

Every e-commerce operator has to collect 1% under CGST Act and 1% under SGST Act and if an interstate transaction is being done, he will collect 2% of tax under IGST Act on the net values of taxable supplies. It means that any dealers/traders who are selling goods online through e commerce platforms like Flipkart, Amazon etc. would get their payment after deduction of 2% tax by e commerce operators.

It may be noted that as per the notification issued by the government on 26th June 2017, the provisions of TCS has been put on hold and it will come into force from a date which will be communicated later.

Procedure for getting registered as Tax Collector

The Registration Application for Tax Deductor can be filed by the applicant directly by themselves. The registration process under GST regime is online and any person who wish to get registered as the Tax Deductor needs to apply in the application prescribed by accessing the GST system.

The documents required whilw getting registered as Tax Deductor include:

  • Applicant has valid PAN or TAN.
  • Applicant must have a valid mobile number.
  • Applicant must have valid E-mail ID.
  • Applicant must have the prescribed documents and information on all mandatory fields as required for registration.
  • There must be a place of business of the applicant.
  • There must be a authorised signatory of the applicant with the valid details.

The registration application of the applicant will then be processed and approved by the relevant Tax Officer and then he will be issued the registration certificate and GSTIN.

The tax collector(e commerce operator) has to register separately in each state and appoint a person in each state/UT who will be liable to pay GST.

Conclusion

GST will have a positive impact on E Commerce sector. Both the suppliers and the consumers will be benefited. It will be easier for the supplier to supply goods in other states. Burden of tax collection and payment to the government is removed from the consumers and suppliers through E Commerce and put squarely on the shoulders of the E Commerce Operators.

In case you are confused about GST as an e commerce seller, feel free to consult the GST experts at LegalRaasta. You can get comprehensive assistance on GST Registration and GST Return Filing. You can also use our GST software for doing end-to-end GST compliance.