GST on E-commerce Sellers – amazon, flipakart, ola
- What is Electronic Commerce (E-Com) and Electronic Commerce (ECO)?
Electronic commerce operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.
Electronic commerce means supply of goods or services over digital or electronic network. In simpler terms, electronic commerce is an electronic or digital platform.
Ex:- Flipkart, Amazon, Paytm, Uber, Ola, Freecharge etc
- What are the types of Electronic Commerce (E-Com) Models?
- Pricipal to Principal
For Example : Urban Ladder, Yepme etc.
- Principal to agents
For Example : Flipkart, snapdeal, amazon etc
For Example : Trivago.com, Ola cabs, Uber etc.
- What is Tax Collection at Source or TCS?
The Ecommerce Operator is required for deducting and depositing tax from each of the transaction. TCS is calculated at the rate 1% of the net value of taxable supplies made through it, where the consideration with respect to such supplies is to be collected by such operator. The amount so collected is called as Tax Collection at Source (TCS). Any dealers/traders selling goods/services online would get the payment after deduction of 1% tax.
- How is TCS calculated and what is its rate?
TCS will be deducted from Base Value of the order (Base value = Order value – GST Tax value – Seller share if any ). The Govt. has notified that the tax shall be collected at source @0.5% in the case of intra-state supplies (+ 0.5% for State Government) or 1% in the case of inter-state supplies. The tax collected by the e-commerce operator shall be paid to the Government by the 10th day of the next month.
- Can online e-commerce seller take credit of TCS?
The supplier of goods/ services, who supplied through the e-commerce operator, shall claim the credit of this TCS in his e-Cash Ledger.
- What are the returns to be filed by an E-commerce seller?
Followings are mandatory forms or returns to be filed by E-commerce operators and suppliers.
|Form number||Due dates|
|GSTR 1 details of outward supply (sales)||11th of next month*|
|GSTR 3b monthly return along with payment||20th of next month*|
|GSTR 9 annual GST return.||On or before 31st December of the subsequent financial year ( 30/06/2019 for the period of FY 2017-18)|
As GSTR2 is not notified , responsibility to file it does not arise.
*Subject to change by government notifications
- Who will levy tax on supplies effected made through electronic commerce?
Person who supplies goods or services through electronic commerce operator shall levy GST on all supplies effected through electronic commerce.
However, central government or state government specify the categories of services under section 9(5) on which tax shall be paid by ECO, not the person who supplies goods or services through electronic commerce.
Section 9 (5) mentions the following supplies –
- Transporting passengers by a radio-taxi and motorcycle
- providing accommodation in hotels, guest houses, for residential or lodging purposes (unregistered suppliers)
- services of house-keeping, such as plumber, carpenter etc( unregistered suppliers). In all three cases, the e-commerce operator shall pay GST, meet the compliances.
A customer has booked a Hotel Room of XYZ Hotel, which is an unregistered hotel through Make My Trip then XYZ hotel need not to charge GST from customer. It is the E commerce operator i.e. Make My Trip who will collect charges along with GST from customer and remit the charges after deducting its commission to XYZ hotel and pay the GST collected from customer to Govt.
If on the other hand XYZ Hotel is registered then XYZ hotel will charge GST itself through normal billing to customer and thereof pay GST to Govt. itself.
Net value of Taxable supplies means the aggregate value of Taxable supplies made during the month less the value of supplies returned to you during the said month.
Therefore, suppliers don’t have to register if they provide these services listed in 9 (5), provided they do not cross the Rs 20 Lakhs threshold for registration.
- Whether a supplier of goods or services supplying through ecommerce operator would be entitled to threshold exemption?
The person supplying goods through an ecommerce operator shall be mandatorily required to register irrespective of the value of supply made by him. However, a person supplying services, other than supplier of services under section 9 (5) of the CGST Act, 2017, through an e-commerce platform are exempted from obtaining compulsory registration provided their aggregate turnover does not exceed INR 20 lakhs *(or INR 10 lakhs* in case of specified special category States) in a financial year.
- What is meant by “net value of taxable supplies”?
The Net Taxable value would be calculated as the
(Total of Taxable value for the sale happened during the current month) – (the Total of Taxable value for the returns received during the month.)
Returns received in a particulate month can be for the sale happened during the same month itself or for a sale happened during one of the previous months.
Which means, the Net Taxable Sales value reported by Ecommerce Operator under GSTR-8 would always be lesser than the Net Sales figures posted by us when we file GSTR-1, at least for the month of Oct 2018 and for a couple of months thereafter. This is because we adjust the Net value of the Returns we received for a Sale prior to TCS against the Sales Value in the current month after TCS.
- How to validate the Net Sales figures from Sales Reports with the value reported by ECO in TCS Return?
When we consolidate the Net Sales for a specific month, we would always consider Net sales happened during the current month & the Net returns received in the current month, which means, we can very well receive a return for a sale happened prior to 01 Oct 2018 as well.
- Whether TCS to be collected on exempt supplies?
No, TCS is not required to be collected on exempt supplies .
- Whether TCS to be collected on supplies on which the recipient is required to pay tax on reverse charge basis?
No, TCS is not required to be collected on supplies on which the recipient is required to pay tax on reverse charge basis.
- Whether online or e- commerce sellers can pay tax under composition scheme?
A composition taxpayer cannot make supplies through e-commerce operator. Thus, question of collecting TCS in respect of supplies made by the composition taxpayer does not arise.
- Whether TCS is to be collected on import of goods or services or both?
TCS is not liable to be collected on any supplies on which the recipient is required to pay tax on reverse charge basis. As far as import of goods is concerned since same would fall within the domain of Customs Act, 1962, it would be outside the purview of TCS. Thus, TCS is not liable to be collected on import of goods or services.
- It is very common that customers of ecommerce companies return goods. How to adjust such sales returns ?
An e-commerce company is required to collect tax only on the net value of taxable supplies made through it. In other words, value of the supplies which are returned (supply return) may be adjusted from the aggregate value of taxable supplies made by each supplier (i.e. on GSTIN basis). For instance, if two suppliers “A” and “B” are making supplies through an ecommerce operator, the “net value of taxable supplies” would be calculated separately in respect of “A” and “B”. If the value of returned supplies is more than supplies made on behalf of any of such supplier during any tax period, the same would be ignored in his case.
- How to credit TCS amount in cash ledger? Whether the refund of such TCS credit lying in the ledger would be allowed? How to Claim the TCS Credits?
- Once E-commerce operators file GSTR-8 Return, it will come under “TDS & TCS Credits Received” section of Return Dashboard.
- To view and act on it, go to Return Dashboard >Search for the Current Month > TDS & TCS Credits Received > Prepare Online > TCS Credits Received section .
- It will show the TCS amount collected by your collector.
- Select the record. You will have 2 actions available here.You can either Accept or Reject the filing by the ECO.
- If all data filed by your Collector are fine and acceptable to you, you can select them & Click on Accept .
- Go back and generate the Summary for filing, the “TDS & TCS Credits Received”. Once you have at least one entry in Accepted/Rejected status, you will be able to generate the Summary file for Filing & the option to “FILE TDS TCS CREDITS RECEIVED” button will get enabled.
- Proceed to file.
You will be able to see the TCS credit in Electronic Cash Ledger. You can take its refund.
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