What Are The GST Compliances For E-Commerce?

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India’s introduction of digital taxation at a time appears to be a step in the right direction. India has seen an unprecedented increase in e-commerce transactions, as has the rest of the world. In this article, we discuss the E-commerce ecosystem and the necessary GST compliances.

What is the need for an E-commerce Ecosystem?
What is the Flow of Transactions in the E-commerce?
What are the GST compliances for E-commerce?
Conclusion
Why Choose Incorp?
Frequently Asked Questions on GST compliances for E-commerce

What is the need for an E-commerce Ecosystem?

It is increasingly necessary for businesses to comprehend and utilise e-commerce to develop trade in India. Entrepreneurs are attracted to e-commerce these days because of the low entry barriers.
Geographic boundaries become irrelevant when shopping online through e-commerce platforms. One can offer their products to customers all around the world using the internet.
E-commerce taxation is complicated. They fall under various tax jurisdictions that govern how these technology-assisted distribution channels operate.
The Indian government has also made quick modifications to the taxes of e-commerce transactions. They are separated into two categories:
- Aggregator of goods/services and
- Sellers of goods/services via an e-commerce platform.

What is the Flow of Transactions in the E-commerce?

We have prepared the chart below to help you understand the flow of transactions in E-commerce.

Seller

Sells products/ services to customers
Receives order intimation from Ecommerce Operator’s portal

Ecommerce Platform

Provides an online platform to connect seller & buyer
Collects money from Customer
ECO charges commission/other charges & remits back money to Seller

Customers

Places order & makes payment to E-commerce Operator
Receives the goods/services from the Seller

*ECO – E-commerce Operator

What are the GST compliances For E-commerce?

Let us take a look at the table below to under the GST compliances For E-commerce.

Particulars	E-Commerce Operator	Seller	Buyer
Registration	ECO is required to register for GST. The representative must be registered if ECO does not have a physical presence in India. GST also necessitates a separate TCS (Tax collection at Source) registration.	Unless you are a notified person who provides the following services: Accommodation service Transportation of passengers Housekeeping services you are obliged to register	If turnover limitations exceed the threshold limit, registration is required.
GST Liability	ECO must collect TCS at 1% under GST on the sales value received from the buyer and pay it to the government in the seller’s name. In addition, pay 18% GST on commissions and other fees received from the vendor.	Seller will claim ITC on GST on the commission paid to ECO. ECO will reimburse you for TCS credit. After obtaining the preceding credits, you must pay GST on the sale of goods or services.	If the buyer is not registered, they will be responsible for paying GST on the purchase. If the buyer is registered, he can claim the ITC (Input tax credit) on GST paid on the purchases.
Compliance	Monthly return for TCS under GST in Form GSTR 8. Monthly return showing outward liabilities (commission) GST in Form GSTR 1 and tax payable in Form GSTR 3B. Annual return filing in Form GSTR 9/9C.	Outward GST in Form GSTR 1 to buyer and tax payable in GSTR 3B are shown on the return. To obtain TCS credit from ECO, submit a monthly return. If applicable, file a GSTR 9/9C annual return.	The return shows outward GST in Form GSTR 1 to the buyer and tax payable in GSTR 3B as a normal taxpayer.

Particulars

E-Commerce Operator

Seller

Buyer

Registration

ECO is required to register for GST.
The representative must be registered if ECO does not have a physical presence in India.
GST also necessitates a separate TCS (Tax collection at Source) registration.

Unless you are a notified person who provides the following services:

Accommodation service
Transportation of passengers
Housekeeping services

you are obliged to register

If turnover limitations exceed the threshold limit, registration is required.

GST Liability

ECO must collect TCS at 1% under GST on the sales value received from the buyer and pay it to the government in the seller’s name.
In addition, pay 18% GST on commissions and other fees received from the vendor.

Seller will claim ITC on GST on the commission paid to ECO.
ECO will reimburse you for TCS credit.
After obtaining the preceding credits, you must pay GST on the sale of goods or services.

If the buyer is not registered, they will be responsible for paying GST on the purchase.
If the buyer is registered, he can claim the ITC (Input tax credit) on GST paid on the purchases.

Compliance

Monthly return for TCS under GST in Form GSTR 8.
Monthly return showing outward liabilities (commission) GST in Form GSTR 1 and tax payable in Form GSTR 3B.
Annual return filing in Form GSTR 9/9C.

Outward GST in Form GSTR 1 to buyer and tax payable in GSTR 3B are shown on the return.
To obtain TCS credit from ECO, submit a monthly return.
If applicable, file a GSTR 9/9C annual return.

The return shows outward GST in Form GSTR 1 to the buyer and tax payable in GSTR 3B as a normal taxpayer.

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Conclusion

India has been at the forefront of digital economy taxation, and the characteristics listed are quickly becoming the new standard for digital economy taxation. Businesses will need to regularly examine their operating models to assess the impact, identify risks, explore planning possibilities as tax law develops. To comply with these significant changes in law, you need to classify financials connected to in-scope transactions to analyze them from an economic viewpoint.

Why Choose Incorp?

We have the expertise and skills to guide you on various indirect tax levies, including Goods and Services Tax (GST). Our Indirect Taxation and Advisory Team at InCorp provides seamless support with advisory services and assists you in compliance with all applicable rules. We also assist in the effective planning and structuring of your business to ensure compliance with the regulations.

Frequently Asked Questions

Is TCS in GST the same as TCS in Income Tax?

No, the two concepts are not identical. TCS under GST is a method for the ECO to collect GST in advance so that the government can maintain track of the transactions that are taking place. For GST, an ECO is required to register under TCS. However TCS for income tax is not applicable.

I am an e-commerce operator; registered as a TCS under the GST regime. I supply goods to multiple states. Do I need to register in each state?

Yes, you must register separately in each state and choose a person responsible for paying GST in each State/Union Territory.
Even if the registration is done in various states, the supply of ECO from one state to another will be considered an inter-state supply. TCS in the form of IGST will be collected and deposited by the appointed person from that state.

Do I need to file Form GSTR-8 even if no TCS liability is there in the tax period?

Suppose an E-commerce operator has no TCS liability in a given tax period. No transaction has been auto-populated in table 4 of GSTR-8 for that tax period due to the supplier's rejection of TCS details in the TDS/TCS credit received table. In that case, Form GSTR-8 will not be required to be filed for that tax period.
Otherwise, you must complete Form GSTR-8 for each tax period in which TCS was collected, unless the details in table 4 are auto-populated.

Can an ECO claim an Input Tax credit against the outward liability just as regular taxpayers?

Yes. It can claim ITC on expenses such as website charges, professional fees, and other expenses incurred in the course of or in the advancement of business against external supplies such as commission, additional fees, and so on.
Up to the amount reflected in the GSTR-2B for the relevant period, ITC can be claimed.

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What Are The GST Compliances For E-Commerce?

Table Of Contents

What is the need for an E-commerce Ecosystem?

Related Read: E-Invoicing Under GST