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GST Applicability on E-commerce Operators

What is an e-commerce operator?

CGST act defines electronic commerce as – ” Electronic Commerce means the supply of goods or services or both,
including digital products over digital or electronic network.”

And defines electronic commerce operator as – “Electronic Commerce Operator means any person who owns, operates or
manages digital or electronic facility or platform for electronic commerce”

As per the above definition a person who is providing a platform for others to sell goods or services is considered an e-commerce operator. A person selling goods or services through his personal website is NOT an e-commerce operator and therefore below provisions do not apply to them.

Requirements under GST

Common points applicable to all e-commerce operators

  • Such persons have to register regardless of the turnover. Threshold limit of Rs. 20 lakh/10 lakh is not applicable to e-commerce operators.
  • They are not allowed to register under the composition scheme.
  • Suppliers who are selling goods or services through such operator are also required to register even if turnover is below the threshold limit of Rs. 20/10 lakhs. (There is one exception to this point as mentioned in point no. 2 below.

Specific requirements by different types of electronic commerce operators

  1. For e-commerce aggregators providing services which are notified under section 9(5)Such persons are required to pay GST as if such services are supplied through it. As the e-commerce operator himself is liable for collection and deposit of GST, there is no question of TCS under section 52.
    Services notified in section 9(5) are
    (i) services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motorcycle for example – Ola, Uber
    Such services are also covered under section 9(3), i.e. reverse charge. And it is also notified via notification no. 5/2017 that if a supplier provides only those services on which entire tax is paid on reverse charge, then such supplier is not required to get registration. So, if there is a person operating five cars through uber and has a turnover of Rs. 25 lakh then also he is not required to register.
    (ii) Services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where the person supplying such service through electronic commerce operator is liable for registration due to turnover beyond threshold limit. For example – Goibibo, Makemytrip
    Therefore if a hotel has a turnover of more than Rs. 20 lakhs then section 9(5) is not applicable and the hotel itself is liable to get registered and pay GST and covered in the below mentioned point.
  2. For e-commerce aggregators selling goods or providing services which are NOT notified under section 9(5)In such case, the suppliers selling goods or services through such operator are liable for getting registration regardless of turnover.
    E-commerce operator is also required to collect TCS under section 52 at the rate of 1% of net taxable supplies. Net taxable supplied refers to the amount of sales less amount of sales return. The suppliers will get the Input tax credit of such TCS amount.

 

About Rohit Pithisaria

Rohit Pithisaria founded TaxAdda in July 2012. He is Practicing Chartered Accountant from Jaipur and been in practice for more than 7 years. He is actively writing from very beginning of his professional career and is author of various tax articles and blogs.

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