GST on E-commerce sellers and Operators – A brief Guide
Who is an e-commerce seller?
An e-commerce seller is a person who is selling goods/services through an e-commerce operator. For example in case of Uber, Ola, the person who owns the car is e-commerce seller and a restaurant is an e-commerce seller in case of swiggy
Who is an e-commerce operator?
A person who is providing digital facility or platform to other persons to sell through them are considered as e-commerce operators. Most common examples are Amazon, Flipkart, Uber, Swiggy, Urban clap. They may be related to goods or services or both.
A person selling through his own website is not considered as e-commerce operator.
Listing service like justdial or indiamart is also NOT e-commerce operators as transactions are not processed through them. And they charge for only listing not on transaction basis.
Registration requirement for E-commerce sellers and operators
a) E-commerce operators
Every e-commerce operator who is required to collect TCS under Section 52 of CGST Act is required to get registered compulsorily. They are required to get registered even if the turnover if less than the specified limit of Rs. 20/10 lakhs.
b) E-commerce sellers
E-commerce seller selling goods (not services) is required to get registered compulsorily even if the turnover is less than specified limit of Rs. 20/10 lakhs.
E-commerce seller selling services is required to get registered only if the turnover is more than the specified limits.
GST Applicability for E-commerce sellers and operators
a) In case of Goods – GST is applicable in each and every case even if the turnover of e-commerce seller and e-commerce operator is less than 20/10 lakh.
b) In case of Service – GST is applicable only if the turnover of e-commerce seller is more than specified limit. But in case of services listed in Section 9(5), GST is applicable in every case.
Who is required to collect GST
a) In case of goods – E-commerce seller is required to collect GST and pay to the government. E-commerce operator is liable only for collecting TDS under section 52.
b) In case of service – E-commerce seller is required to collect and pay GST to government. But in case of services listed in Section 9(5), e-commerce operators are required to collect GST.
What is Section 9(5)?
As per section 9(5) of CGST act, government by notification may specify the category of services on which electronic commerce operator is liable to collect and pay GST instead of the person providing service. All the provisions of the act will apply to the e-commerce operator and not on the service provider. The government by notification has also exempted such persons to register if the whole of tax is liable to be paid by electronic commerce operator.
Example – A person has 5 cars and he runs all cars on Ola. The turnover amount is more than 20 lakhs. Since, Ola is liable to collect GST on all such sales, therefore such person is not required to get registered. If such person’s turnover other than Ola goes beyond 20/10 lakhs then he is liable for registration.
If an electronic commerce operator does not have any physical presence in India then he needs to appoint any person for this purpose in India.
The categories of services specified by the government under this section
1. Services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motorcycle for example – Ola, Uber. So, if a person is operating five cars through uber and has a turnover of Rs. 25 lakh then also he is not required to register.
2. 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.
Example – Goibibo, MakeMyTrip. Therefore if a hotel has a turnover of more than Rs. 20/10 lakh then section 9(5) is not applicable and the hotel itself is liable to get registered and pay GST.
3. Services by way of house-keeping, such as plumbing, carpentering etc., except where the person supplying such service through electronic commerce operator is liable for registration due to turnover beyond threshold limit.
TCS by E-commerce Operators
TCS provisions are applicable on e-commerce operator from 1st October 2018. They are required to collect Tax Collection at Source (TCS) at the rate of one per cent (1% IGST or 0.5% CGST and 0.5% SGST) of the net sales of goods or services made through their platform. Tax is to be collected only on the amount which is collected by the operator itself.
In case of services falling under Section 9(5), the amount of GST is collected and required to pay by e-commerce operators itself, therefore, they are not required to collect any TCS.
This is a guest post by Rohit Pithisaria. He is a 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.
Disclaimer: Finkwik takes no responsibility for errors in facts and any other materials shown in the article.