What is an e-commerce operator in GST?

Here we discussed gst on electronic commerce operators in which Electronic commerce Operators (ECO) is displays products as well as services which are actually supplied by some other person to the consumer, on their electronic portal. The consumers buy such goods /services through these portals. On placing the order for particular product /service, the actual supplier supplies the selected product/service to the consumer. The Price/ consideration for the product/service is collected by the ECO from the consumer and passed on to the actual supplier after the deduction of commission by the ECO.

Relevant Definitions

Electronic Commerce Means as per Section 2(44) of CGST Act, Supply of goods or services or both including digital products over digital or electronic network.

Electronic Commerce Operator Means as per Section 2(45) of CGST Act, Any person who owns, Operates or manages digital or electronic facility or Platform for E- Commerce.

TCS collection| GST on Electronic Commerce Operator (ECO) 2023

• E Commerce companies selling goods on portal are being made liable to collect 1% Tax Collection at source (TCS) (GST Notification on TCS is 51/2018 Central Tax dated 13-09-2018)

• The rate of TCS is 1% for IGST for Interstate taxable supply & in case of with in state supply the CGST rate is 0.5% & SGST rate is 0.5%.(GST Notification No. 52/2018-Central tax and Notification No.2/2018-Integrated Tax both dated 20-09-2018)

• The amount of TCS deposited by the E-Commerce Operator with the appropriate government will reflected in the electronic cash ledger of the actual registered supplier(on whose account such collection has been made) on the basis of statement filed by the operator in FORM GSTR-8 in terms of Rule 67 of the CGST Rules,2017. The said credit can be used at the time of discharge of tax liability by the actual supplier.
• In case of goods on which GST is not payable, the 1% tax collected by E-commerce will be cost as the actual supplier of such goods will not be able to take credit of this TCS paid by E-commerce companies.
• In Case of Supply of specified services (Like Taxi & Hotel Booking), the E-commerce Operator himself will be liable to pay entire IGST/CGST/SGST on such services of section 9(5) of CGST Act, 2017.

Note – There is no TCS if you are selling your own products through electronic portal

Business Models | GST on Electronic Commerce Operator (ECO) 2023

Business to Consumer (B2C) – These model connects business and Individual customer i.e. End-users

Business to Business (B2B) – These model connects business to their suppliers, distributors and other part of supply chain

Consumer to Consumer (C2C) – In this model Consumers interact with each other like sale of second hand goods

E –Commerce Models |GST on Electronic Commerce Operator (ECO) 2023

Market Place Model – In this Model E–commerce operators does not maintains his own inventory. The goods are supplied directly by participating manufacturer or wholesaler directly to customer. Payment is routed through e-commerce operators who pays to the selling Manufacturer/Wholesaler after deducting their commission. Invoice issued in the name of retailers/wholesalers with their GSTN. E.g. snap deal, Flipkart, Shoppers stop

Aggregator Model – The Aggregator Model operates when e-commerce operator intends to supply goods or services under his brand. The e-commerce operator procures goods from manufacturers and sales  under his own invoice .E.g.-Ola & Uber

Inventory Model – The e-commerce operator himself procures and stores the goods then sales them under his own invoice. E.g. Amazon

E Commerce Registration | e-commerce operator under gst registration

1. As Per section 24(x) of the CGST Act,2017 Every electronic commerce operator irrespective of his turnover, is mandatorily required to obtain GSTIN registration .This registration is in addition to and separate from GST registration obtained as normal supplier.

If person supplying services other than supplier of services under section 9(5) of CGST Act,2017 through e-commerce platform are exempted from obtaining compulsory registration provided their aggregate turnover does not exceed 20 lakhs (10 lakhs in case of specified category states) in financial year (GST Notification No.65/2017-Central tax, dated 15-11-2017).

2. If E-commerce operator has suppliers in different states, he is required to obtain registration for TCS in each state. To facilitate obtaining registration he can indicate his head office as place of business, if he does not have place of business in that state .Thus all returns can be filed through HO.

3. If a person is required to collect tax at source in the state or UT where he does not have physical person , he shall mention name of that state in Part-A of application form GST REG-07 and mention name of state or UT where he has principal place of business in Part B in form GST REG-07

4. The proper officer may grant registration after due verification and issue a certificate of registration in Form GST REG-06 within 3 working days from the date of submission of the application.

5.The registration can be cancelled after notice, enquiry and hearing. The cancellation shall be communicated to the said person electronically in the Form GST-REG-08.

is gst mandatory for e commerce operator?| Registration of Supplier who is supplying goods or services through e-commerce operator

Registration of supplier who is supplying goods or services through e-commerce operator is mandatory irrespective of his annual turnover. The supplier cannot supply under composition scheme he must supply the goods and services through normal scheme only.

If in Particular Month, the sales return are more than supplies made, there will be no TCS for that month. However such negative figure will not be carried forwards.

Specified Services |GST on Electronic Commerce Operator (ECO) 2023

The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services:

Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax:

Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.

Section 9(5) of the CGST Act/Section 5(5) of IGST Act,2017

Specified categories of services the tax on Intra -state supply/ inter state supply of services on which tax shall be paid by E-Commerce Operator (ECO).

(a) Services by ways of transportation of passengers by a radio –taxi, motor cab (not more than 6 passengers), Maxi cab (Capacity > 6 Passengers but less than 12 excluding driver) and motor cycle; (for 01-07-2017 to 31-12-2021 Notification No.17/2017-Central Tax (Rate), dated 28-06-2017)

Services by ways of transportation of passengers by a radio –taxi, motor cab (not more than 6 passengers), Maxi cab (Capacity > 6 Passengers but less than 12 excluding driver) and motor cycle, Omnibus or any other motor vehicle (with Effect from 01-01-2022 Notification No.17/2021-central Tax (Rate)-dated 18-11-2021)

(b) Services by way of providing accommodation in hotels, inns, guest houses, clubs campsites, or other commercial place meant for residential or lodging purposes, except where the person supplying such services through electronic commerce operator is liable for registration under section 22(1) of CGST Act,2017.

(C) Services by way of housekeeping such as plumbing, carpentering etc. except where the person supplying such services through electronic commerce operator is liable for registration under section 22(1) of CGST Act.(With Effect from 22-08-2017 Notification No.23/2017-Central Tax (Rate), dated 22-08-2017)

(d) Supply of restaurant service other than the services supplied by restaurant, eating joints etc located at specified premises.(With effect from 01-01-2022 Notification No.17/2021-Central Tax (Rate), dated 18-11-2021)

Specified Premises Means premises providing hotel accommodation service having declared tariff of any unit of accommodation above seven thousand five hundred rupees per unit per day or equivalent

All the provision of the CGST Act shall apply to such ECO as if he is the supplier liable for paying the tax in relation to the supply of above services.

GST Tax payment

Normally payment of taxes are required to be made by supplier but in case of services supplied through Electronic commerce Operator, the section 9(5) of CGST Act and section 5(5) of IGST Act empowers the government to specify the services on which tax will be payable by Electronic commerce operator and not by supplier.in respect of services not specified but supplied through Electronic commerce operator, tax will be payable by the supplier. In case of supply of goods through Electronic commerce operator, the tax will be payable by supplier.

GST RCM in case of E-Commerce Operator

As per section 9(5), the government is empowered to specify the categories of services by issuing the notification for which tax will be payable by electronic commerce operator although the services will be provided by different persons.

Generally E commerce Operators have entered in to contract with taxi owners who have agreed to provide the services of transportation of passengers. The passengers can directly contact OLA/UBER through Phone or Application. Recipient can directly contact to car driver i.e Taxi owner.

The service of transportation of passenger is provided by car driver and not by E commerce Operator i.e. OLA/UBER.as this service is notified by government under section 9(5) of GST Act, tax will be payable by OLA/Uber and not by the driver who has actually provided the service of transportation of passenger. Section 9(5) of GST Act and 5(5) of IGST Act is only for the purpose of services not for any Goods. Therefore tax will not be payable on supply of goods by ECO. It will only be payable by the supplier of the goods.

Net value of Taxable supply in GST by E-Commerce Operator

As per section 52(1) every ECO shall collect an amount calculated at the rate not exceeding 2% of the net value of taxable supplies. Thus, Eco is required to collect the amount of tax, out of the amount payable or paid to the supplier.

However, in case of collection of tax at source, the responsibility of the person is only to deduct the specified % of the consideration and deposit the tax.

Manner of Calculation of Net value of taxable supplies:

As per sub section of 52(1) the Eco shall collect at such rate not exceeding 2% as may be notified on the net value of taxable supplies made through it where the consideration with respect to such supplies is to be collected by the operator. The net value of taxable supply shall be computed in following manner:

• Eco shall divide the supplier in to 3 parts
• Supplier of goods
• Supplier of services notified under section 9(5) for which Eco is liable to pay tax
• Supplier of other services.

The taxable value of supply in respect of 1 & 3 shall be computed

•  Compute the aggregate value of supplies made by each of the supplier
• Reduce the value of return goods or services from the value of supplies computed in (b) above.

Such amount shall be considered as the net value of taxable supply.

Time for filling GSTR-8| GST on Electronic Commerce Operator (ECO) 2023

The ECO shall pay the amount to government within 10 days after the end of the in which the collection is made.

The statement is required to be filled by ECO in the form GSTR-8 electronically through common portal. The details furnished by the operator shall be made available to each of the supplier in Part C of Form GSTR-2A. The form GSTR-8 consist of seven tables.

The return is required to be filed by 10^th of following month. The information in return is auto populated in Part C of GSTR-2A of the supplier. The amount can be used by supplier for payment of Tax.

In addition to Monthly statement , section 52(5) also cast obligation on the operator who has collected the amount notified under sub section (1) to furnish annual statement containing details of outward supply of goods or services or both including supplies which are returned by the customers and the amount collected by the ECO. The annual statement is required to be furnished in such form and in such manner as may be prescribed before last day of December following end of the financial year.

Restaurant service through e-commerce operator

E commerce operator be made liable to pay tax on services provided through them including restaurant service with some exceptions. As Per Notification 17/2021 ECO like Zomato, Swiggy are liable to pay tax on the restaurant services. This change is not applicable for restaurant services provided from premises with declared of Rs.7500/-or above per day.

As per Notification 11/2017 ‘Restaurant service means supply, by way of or as part of any service of goods being food or any other article for human consumption or any drink provided by a restaurant eating joint including mess canteen whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied’ A restaurant is a place which is in the business of preparing and serving food in the premises or as take away.

1. Restaurant located in a premises where declared tariff is not exceeding rs.7500 per day and providing restaurant services.
2. Food and beverage sold as a part of restaurant services and which qualifies as restaurant services
3. Cloud kitchens providing restaurant services etc.
4. Standalone restaurant which are not ice cream parlours or bakeries

As per Notification 17/2021 Specified premises means premises providing hotel accommodation service having declared tariff of any unit of accommodation above 7500 rupees per unit per day or equivalent.

Interest & Penalty on Late Payment of GST

For any delay in filling GSTR-8 return, 200/- per day late fees applicable. Rs.100/- for CGST & Rs. 100/- for SGST. Penalty can not be levied more than of Rs.5000.

Moreover, with the late fee, the taxpayer is also liable to pay an annual interest of 18% on the basis of the amount of unpaid tax.

Clarifications on certain issues regarding ECO