In this Covid world, work from home has become the new norm. Thus, more and more businesses are choosing to go digital for a wider reach. If you are someone who wants to start selling through e-commerce platforms and wondering if you need to register for GST then this article can help. But before that It is important to understand the seller categories in order to avoid the confusion.

E-commerce Seller/Vendor Categories

E-commerce sellers can be classified into three categories for the purpose of applicability of GST provisions. Here are the following categories:

1. Selling Goods
2. Selling Services [other than mentioned in Section 9(5)]
3. Selling services mentioned in Section 9(5)

1. Selling Goods:

If a person is selling goods on the e-commerce websites then he/she will have to get registered under GST even if their turnover is less than the required threshold limit which is Rs. 40/20/10 lakh. The people who want to sell goods via e-commerce need to register before starting to sell on the platform.

Example: Sellers who want to set-up their digital stores on platforms like Amazon, Flipkart etc. are required to have GSTIN at time of registration as a seller on their platform.

2. Selling Services [other than mentioned in Section 9(5)]:

A person selling services other than the ones mentioned in Section 9(5) is required to get registered under GST only if his turnover is more than the given threshold which is Rs. 20/10 lakh. And if a person is not registered then GST is not applicable for the transactions made by his e-commerce sales.

3. Selling services mentioned in Section 9(5):

Sellers falling under this category are not liable to get registered under GST irrespective of their turnover.

NOTE: Business owners who are selling their goods and services on e-commerce websites are NOT eligible to opt for the composition scheme. They have to mandatorily opt for regular scheme as per the rule.

What is section 9(5)?

Section 9(5) states that the government can specify the categories of services for which the e-commerce operator will be required to collect and pay GST on behalf of the seller. All the provisions will apply to the e-commerce operator and not the sellers who are selling the services via the e-commerce websites.

Services covered under section 9(5)

Following are the categories specified by the government:

• Transportation Services: If transportation services like cabs, busses, radio-taxis, motor-bikes and cycles etc. are being provided via an e-commerce operator then the business is not liable to register even if its turnover crosses the threshold of GST Registration . Example: Cab services like OLA and Uber.
• Accommodation Services: Services including Inns, clubs, campsites, hotels, lodges etc. where the places are rented for residential use. Example: MakeMyTrip, Goibibo. Here, the person supplying these services, via the e-commerce operator, is not liable to get registered and pay GST if the turnover is below the threshold limit i.e. less than Rs. 20/10 lakh. Therefore, if a hotel has a turnover of more than Rs. 20/10 lakh per annum then section 9(5) is not applicable and the seller/hotel owner is required to pay GST.
• Housekeeping Services: Services like plumbing, cleaning, carpentering etc. Example: Urban Company services. Even here, the person supplying these services, via the e-commerce operator, is liable to get registered and pay GST ONLY IF the turnover is exceeds threshold limit i.e. more than Rs. 20/10 lakh. If it is below the given limit then the E-commerce operator is required to pay the GST.

Let us understand the scenario more clearly with the help of this tabular representation:

Also Read:

• E-invoicing for e-commerce operators.
• Register as an e-commerce operator in India
• Tax Collected at Source (TCS) by an e-Commerce Operator

FAQS

It is very common that customers of e-commerce companies return goods. How these returns are going to be adjusted?

• Answer: An e-commerce company is required to collect tax only on the net value of taxable supplies. In other words, the value of supplies which are returned are adjusted in the aggregate value of taxable supplies. (Refer to Explanation to Sec. 52(1) of the CGST Act, 2017).

What is Tax Collection at Source (TCS)?

• Answer: The e-commerce operator is required to collect an amount at the rate of one percent (0.5% CGST + 0.5% SGST) 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 collected is called Tax Collection at Source (TCS). (Refer to Section 52(1) of the CGST Act, 2017).
• Read all about TCS by an e-Commerce Operator here.

Is the e-commerce operator required to submit any statement? What are the details that are required to be submitted in the statement?

• Answer: Yes, every operator is required to furnish a statement, electronically, containing the details of outward supplies of goods or services effected through it, including the supplies of goods or services returned through it, and the amount collected by it as TCS during a month within ten days after the end of such month. The statement will be filed in FORM GSTR-8. The operator is also required to file an annual statement by 31st day of December following the end of the financial year in which the tax was collected. (Refer to Section 52(4) and Section 52(5) of the CGST Act, 2017)

For full FAQs by the CBIC, refer the link.

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