Introduction
E-commerce businesses in India are subject to specific GST regulations, including Tax Collection at Source (TCS), invoicing rules, and mandatory registration requirements. Under the CGST Act, 2017, an E-Commerce Operator (ECO) is any entity facilitating the supply of goods or services through a digital platform. Compliance with GST provisions, TCS, and return filing is essential to avoid penalties and ensure smooth operations. This guide answers common GST-related FAQs for e-commerce businesses, ensuring clarity on registration, tax collection, invoicing, and reporting requirements.
FAQS are as under:-
1. What is E-Commerce and Who is an E-Commerce Operator Under GST?
Under Section 2(44) of the CGST Act, 2017, Electronic Commerce (E-Commerce) refers to the supply of goods or services, including digital products, through a digital or electronic network.
An E-Commerce Operator (ECO), as defined under Section 2(45) of the CGST Act, 2017, is any person who owns, operates, or manages a digital or electronic platform facilitating e-commerce transactions.
These definitions are crucial for understanding GST compliance obligations, including tax collection at source (TCS) and registration requirements for e-commerce businesses in India.
2. Is GST registration mandatory for e-commerce operators, regardless of turnover?
Yes, under Section 24(x) of the CGST Act, 2017, e-commerce operators are not eligible for the threshold exemption limit. This means they must obtain GST registration, irrespective of their turnover or the value of supplies made.
Do sellers supplying goods or services through e-commerce platforms get a threshold exemption under GST?
No, as per Section 24(ix) of the CGST Act, 2017, suppliers selling through e-commerce platforms that are required to collect tax at source under Section 52 must register under GST, regardless of their turnover. However, if an e-commerce operator is directly liable to pay GST on certain notified services under Section 9(5) of the CGST Act, 2017, the suppliers of such services can avail of the threshold exemption.
3. In which cases does an e-commerce operator have to pay GST instead of the actual supplier?
E-commerce operators are liable to pay GST under Section 9(5) of the CGST Act, 2017, but only for specific services notified by the government. If such services are provided through their platform, the e-commerce operator must collect and remit GST as if they were the actual supplier. A similar provision applies for inter-state supplies under Section 5(5) of the IGST Act, 2017. (As per Notification No. 17/2017-Central Tax (Rate) and 14/2017-Integrated Tax (Rate), both dated 28.06.2017).
4. Can e-commerce operators paying tax on notified services claim threshold exemption under GST?
No, e-commerce operators liable to pay tax on notified services under Section 9(5) of the CGST Act, 2017 are not eligible for the threshold exemption. They must register under GST, irrespective of their turnover.
5. What is Tax Collection at Source (TCS) under GST?
As per Section 52(1) of the CGST Act, 2017, e-commerce operators must collect 1% TCS (0.5% CGST + 0.5% SGST) on the net taxable value of supplies made through their platform when they collect payment from customers on behalf of sellers. The collected amount is then deposited with the government.
6. How are returns of goods handled in case of E-Commerce under GST?
E-commerce operators are required to collect TCS only on the net taxable value of supplies. If customers return goods, the value of such returns is deducted from the total taxable supplies before calculating TCS. (As per Explanation to Section 52(1) of the CGST Act, 2017).
7. What does "Net Value of Taxable Supplies" mean under GST?
The net value of taxable supplies refers to the total value of taxable goods or services supplied through an e-commerce operator by registered suppliers in a month, excluding services for which the e-commerce operator itself is liable to pay GST under Section 9(5) of the CGST Act, 2017. This value is reduced by the taxable supplies that are returned to suppliers during the same month. (As per Explanation to Section 52(1) of the CGST Act, 2017).
8. Are all e-commerce operators required to collect tax on behalf of suppliers?
9. When should e-commerce operators collect and remit TCS to the government?
E-commerce operators must collect Tax Collection at Source (TCS) in the same month in which they receive payment from customers. The collected amount must then be deposited with the government within 10 days after the end of that month. (As per Section 52(3) of the CGST Act, 2017).
10. How can suppliers utilize the TCS collected by e-commerce operators?
The TCS amount deposited by the e-commerce operator with the government will be auto-populated in the GSTR-2A of the registered supplier. This credit can be claimed and adjusted against the supplier’s GST liability when filing returns. This process ensures that suppliers can offset the TCS against their tax dues. (As per Section 52(7) of the CGST Act, 2017).
11. Do e-commerce operators have reporting obligations under GST?
Yes, e-commerce operators must submit GSTR-8 on a monthly basis, detailing taxable supplies, returns, and the TCS collected. This filing must be completed within 10 days after the month-end. Additionally, an annual statement must be submitted by December 31st of the following financial year to consolidate TCS details. (As per Sections 52(4) and 52(5) of the CGST Act, 2017).
12. How does GST ensure reconciliation of TCS between operators and suppliers?
The TCS details filed by e-commerce operators in GSTR-8 are automatically matched with the outward supplies reported by suppliers in their GST returns. If discrepancies arise, both parties will be notified to rectify the mismatched data. (As per Sections 52(8) and 52(9) of the CGST Act, 2017).
13. What happens if discrepancies in TCS details are not rectified?
If the mismatched details are not corrected by either the supplier in their GST return or by the e-commerce operator in their statement for the relevant month, the unmatched amount will be added to the supplier’s output tax liability in the return of the subsequent month. The supplier must then pay the additional tax along with interest from the original due date until the date of payment. (As per Sections 52(10) and 52(11) of the CGST Act, 2017).
14. Can tax authorities demand supply or stock-related information from e-commerce operators?
Yes, tax officers of Deputy Commissioner rank or higher have the authority to issue notices to e-commerce operators requesting details regarding supplies, stock, or other business transactions. The operator must provide the requested details within 15 working days from the date of notice issuance. (As per Sections 52(12), 52(13), and 52(14) of the CGST Act, 2017).
15. Can multiple sellers register the same warehouse or fulfillment center as their additional place of business?
Yes, multiple suppliers can declare a shared facility, such as a warehouse operated by an e-commerce platform, as their additional place of business. However, each supplier must have valid supporting documents (such as ownership proof or an agreement with the premises owner) and must maintain proper records in compliance with Section 35 of the CGST Act, 2017 and Rules 56 to 58 of the CGST Rules, 2017.
16. Do online travel agents operating through digital platforms qualify as E-Commerce Operators (ECOs)? Are they required to collect TCS under GST?
Yes, travel agents who provide services via a digital or electronic platform are considered E-Commerce Operators (ECOs) under the GST framework. As per Section 52 of the CGST Act, 2017, they are required to collect Tax Collected at Source (TCS) on taxable supplies where they facilitate transactions.
17. How is TCS handled when multiple e-commerce operators are involved in a single transaction?
When more than one E-Commerce Operator (ECO) is involved in a transaction, each instance must be evaluated separately as per Section 52 of the CGST Act, 2017. The responsibility to collect and remit TCS depends on the specific role of each operator in the transaction.
18. If an E-Commerce Operator does not generate invoices but only facilitates payment processing, how is TCS calculated?
In cases where the seller issues the invoice directly to the buyer but the payment is processed via the E-Commerce Operator (ECO), TCS must be collected on the net taxable value of the supply for which the operator collects payment. This amount must be reported in Form GSTR-8 and deposited with the government. The collected TCS will be available as a credit to the supplier in their electronic cash ledger. (As per Section 52(1) of the CGST Act, 2017).
19. If a business operates from multiple locations, is it mandatory to maintain a single serial number for invoices across all locations?
No, as per Rule 46 of the CGST Rules, 2017, an invoice may have a unique serial number up to sixteen characters in one or multiple series containing alphabets, numerals, special characters like hyphens (-) or slashes (/). Businesses can maintain different invoice series for each location, provided that the same series is not repeated across financial years.
20. Do e-commerce operators need to collect TCS on sales of exempted or zero-rated goods like books?
No, TCS is applicable only on taxable supplies as per Section 52(1) of the CGST Act, 2017. If goods being sold through an E-Commerce Operator (ECO) are exempt from GST or fall under the zero-tax category, then no TCS needs to be collected.
21. If a business owner sells their own products through a self-hosted website, are they considered an e-commerce operator, and is TCS applicable?
A seller operating through their own website falls under the definition of an E-Commerce Operator (ECO) as per Section 2(44) and 2(45) of the CGST Act, 2017. However, TCS is applicable only when an ECO facilitates supplies by third-party sellers and collects consideration on their behalf. If a business sells its own products directly through its platform, TCS is not applicable, but GST will be levied at the applicable rate.
22. If a business purchases goods from multiple vendors and sells them under its own brand through a website, is it required to collect TCS?
No, TCS is not applicable in this scenario. Under Section 52 of the CGST Act, 2017, TCS is collected only on supplies made by third-party sellers through an E-Commerce Operator (ECO) where the operator collects the payment on their behalf. In this case, the business purchases goods first and then sells them on its own account, meaning it is acting as a principal supplier and not as an ECO facilitating third-party sales. GST will apply on sales, but TCS collection is not required.
Final Thoughts
For e-commerce operators and sellers, GST compliance is critical for legal and financial stability. Adhering to TCS provisions, ensuring timely GSTR-8 filing, and maintaining proper invoicing records can help businesses avoid disputes and penalties. Staying updated with GST laws, exemptions, and reporting obligations is key to long-term success in India’s growing digital economy.
Need expert GST guidance for your e-commerce business? Stay compliant and optimize your tax strategy today with TaxGroww!