GST Implications for E-Commerce Operators
The Goods and Services Tax (GST) was introduced in 2017. It replaced the previous tax regime, eliminating the cascading effect of taxation. However, the GST regime has several tax implications for taxpayers, and E-commerce operators are no exception. There exists a threshold limit to get registered under the GST, and businesses or taxpayers having an annual turnover of more than Rs 20 or Rs 40 lakh have to be registered, but there is no threshold limit for e-commerce operators. To start a business on digital platforms or online channels, each individual has to be registered, which is an implication irrespective of the threshold limit of the business. Below are mentioned other GST implications for E-Commerce Operators.
Who is an E-Commerce Operator?
An e-commerce operator refers to a person who supplies goods or services or both including digital products over a digital electronic network. Such a person owns, operates, or manages a digital or electronic facility or platform for electronic commerce.
GST is a destination-based tax and it is charged at the place where they are consumed or used not based on the origin place. The state where the goods or services are utilized will charge the tax.
Mandatory GST Registration for ECO
Every prospective E-Commerce Operator has to get GST registration irrespective of aggregate turnover limits. Under section 24 (ix) of the CGST Act 2017, ECOs have no threshold limit and it is applicable when supplies are made through such electronic commerce operator who collects tax at source.
In cases, where the e-commerce operators are to pay tax on behalf of the suppliers mentioned in section 9 (5) of the CGST Act 2017 are entitled to a threshold limit for the registration and they are also exempted from collecting tax at source from the recipients as well.
No Threshold Exemption for E-Commerce Operators
There are no exemptions for ECOs, unlike normal taxpayers. When normal taxpayers have to get registered when aggregate annual turnover crosses a certain mark, the e-commerce operators have to register before starting a business.
E-Commerce Operators to Collect Tax at Source
Any person doing online commerce or dealing on digital platforms is required to collect an amount at the rate of 1% of which .5% is CGST and .5% is SGST. The collected amount is called tax at source or TCS which each e-commerce operator is required to collect.
The operator has to make the collection in the month in which the consideration amount is collected from the recipient of goods and services. The collected amount is to be paid to the government by the 10th of the month after the month in which the amount is collected.
When the E-operators sell zero-rated goods like books or others, then they do not need to collect TCS as such supply itself is not taxable. The TCS is required only on the net value of taxable supplies which means the aggregate value of taxable supplies of goods or services or both other than services on which the entire tax is payable.
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When two or more ECOs are involved in a transaction, it is treated separately and the TCS is deducted accordingly. Travel agents fall under the ECOs category and are liable to collect TCS.
And proper maintenance of invoices is also an implication for e-commerce operators and if you are having trouble maintaining invoices, reach out to TaxDunia, we ensure smooth compliance and offer personalized solutions. Â
