FAQs on E-Commerce transactions & GST
by Arina Smith Ecommerce 05 December 2018
Electronic commerce (e-commerce) is not an unfamiliar term these days; however, the applicability of taxes on e-commerce is still afresh. The government has introduced a levy of tax collected at source (TCS) on e-commerce transactions. Following are few basic FAQs that can help us understand the new provisions.
1. What is ELECTRONIC COMMERCE?
E-commerce means the supply of goods or services including digital products over a digital or electronic network. More commonly, it is a trade of goods and services on the Internet through electronic media.
2. Who is an e-commerce Operator?
E-commerce Operator (ECO) means any person who owns, operates or manages digital or electronic platform.
3. Is GST levied on e-Commerce transactions?
As per Section 9(5) of the CGST Act and Section 5(5) of the GST Act, the Central Government is empowered to specify the categories of services on which tax shall be paid by the electronic commerce operator (ECO) if such services are supplied through it. Further, the E-Commerce operator shall be liable to pay GST.
4. How is Collection of Tax at Source (TCS) related to GST and e-commerce operators?
Every CEO must collect the tax when a supplier supplies certain goods or services through a portal and collects the payment for that supply. However, in the case of cash-on-delivery (COD) payments, no TCS applies. When payment is collected by a third party, under an arrangement with the ECO for payment to the supplier, the ECO becomes liable to collect TCS.
Every ECO, not being an agent, has been mandated to collect tax at source (TCS) from the net value of taxable supplies made through it by the other suppliers, whenever the ECO collects the consideration on behalf of the supplier. This has been done to shift the compliance from small-scale vendors/service providers to ECO.
As per latest GST notification, the Finance Ministry has notified that e-commerce operators shall collect an amount at the rate of 1 percent as TCS under the Goods and Services Tax Act, on the supplies made by them from 1st October onwards. Of the amount collected, half will go to the Centre while half to the consuming state.
In the case of inter-state supplies by the e-commerce companies, Integrated GST (IGST) at the rate of 1 percent would be deducted in the form of TCS while making payment to the suppliers.
5. What is the registration limit for ECO?
As per Section 24, clause(x) of CGST Act, an e-commerce operator is required to get registered irrespective of the turnover. Moreover, even the benefit of the threshold limit is not available to ECO.
6. What are the compliances to be met?
ECO shall furnish a monthly return in FORM GSTR- 8 electronically through the common portal which contains details of supplies of goods or services or both effected through ECO, including the supplies of goods or services or both returned through it and the amount of tax collected at source.
- Due Date of return filling:
The details in GSTR-8 should be furnished on/before 10th of the month succeeding the calendar month in which tax has been collected at source. Further, the amount of tax collected by ECO (TCS amount) is required to be deposited by the 10th of the month succeeding the calendar month in which tax has been collected at source.
- Filing of Annual Return:
The ECO is also mandated to file an Annual Statement on or before the 31st day of December following the end of the financial year.
To know more on E-commerce Operators, visit CCHTaxOnline.
Understanding how GST brings E-commerce transactions in its ambit.