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GST on E-commerce Sellers – 14 Questions Answered

Who is considered as e-commerce operator?

CGST act defines electronic commerce as – ” Electronic Commerce means the supply of goods or services or both, including digital products over digital or electronic network.”

And defines electronic commerce operator as – “Electronic Commerce Operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce”

As per the above definition a person who is providing a platform for others to sell goods or services is considered an e-commerce operator. Main examples of such operators selling goods are Amazon, Flipkart, Snapdeal and operators selling services are Uber, Ola, Swiggy, Urban Clap.

A person selling goods or services through his personal website is NOT an e-commerce operator and therefore below provisions do not apply to them. He has to charge GST and file returns as a normal dealer.

A businessman has registered on Justdial/Indiamart. A buyer calls such seller and makes a purchase. This transaction is not done through Justdial/Indiamart and therefore cannot be considered as an e-commerce operator transaction. The difference in this model is that the transaction is not taking via platform and also Justdial/Indiamart is charging the business for listing or premium listing and not charging a specific percentage of commission on sales.

E-commerce Operators Registration Requirement

E-commerce operators have to register regardless of the turnover. Threshold limit of Rs. 20 lakh/10 lakh is not applicable to e-commerce operators. They are not allowed to register under the composition scheme.

E-commerce sellers Registration Requirement

Persons who sell goods/services through an e-commerce operator are e-commerce sellers. They may be selling goods/services through one or more e-commerce operators and may also sell through their shops/office along with such platforms.

Such sellers can be classified into three categories for the purpose of applicability of GST provisions. They are

1) Selling goods – Such sellers are required to get registered under GST even if there turnover is less than the threshold limit of Rs. 40/20/10 lakh. It means they are required to register before selling through the e-commerce platform. All platforms like Amazon, Flipkart etc. required GSTIN at time of registration as a seller on their platform.

2) Selling services other than mentioned in Section 9(5) – Such sellers are required to register and collect GST only if there turnover is more than the threshold limit of 20/10 lakh. And if they are not registered then GST is not liable on such transaction done through e-commerce operator.

3) Selling services mentioned in Section 9(5) – Such sellers are not liable to register under GST even if their turnover is more than the threshold limit.

A person who is selling goods/service through e-commerce operator cannot take registration under composition scheme. He needs to get registered under regular scheme only.

What is section 9(5) and Services covered under Section 9(5) of CGST Act?

Section 9(5) states that the government may specify the categories of services on which e-commerce operator is liable to collect and pay GST as if e-commerce operator is providing the service. All the provision will apply to such e-commerce operator and not the persons selling services through him.

The categories of services specified by the government under this section

  1. Services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motorcycle for example – Ola, Uber. So, if a person is operating five cars through uber and has a turnover of Rs. 25 lakh then also he is not required to register.

  2. Services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where the person supplying such service through electronic commerce operator is liable for registration due to turnover beyond threshold limit. For example – Goibibo, MakeMyTrip. Therefore if a hotel has a turnover of more than Rs. 20/10 lakh then section 9(5) is not applicable and the hotel itself is liable to get registered and pay GST.

  3. Services by way of housekeeping, such as plumbing, carpentering, except where the person supplying such service through electronic commerce operator is liable for registration due to turnover beyond the threshold limit.

Who is liable to collect and pay GST – E-commerce operator or e-commerce sellers

1) Selling Goods – The e-commerce seller is liable for the collection of GST and pay to the government.

2) Selling services other than mentioned in Section 9(5) – The e-commerce seller is liable for collection of GST and pay to the government.

3) Selling services mentioned in Section 9(5) – The e-commerce operator is liable to collect and pay GST to the government.

Industry Wise analysis and ComparisonIndustryExamples of E-commerce OperatorSeller Registration RequirementGST CollectionSelling GoodsAmazon, Flipkart, SnapdealSeller required to register.Seller is required to collect GST.Hotel (Turnover of hotel less than 20/10 lakh)Goibibo, OYO, MakeMyTripHotel is not required to register.E-commerce operator will collect GST.Hotel (Turnover of the hotel more than 20/10 lakh)Goibibo, OYO, MakeMyTripHotel is required to register.Hotel is required to collect GST.Cab Aggregator (Irrespective of turnover)OLA, UberCar owner required to register only if his turnover other than through cab aggregators is more than 20/10 lakh.Cab aggregator is required to collect GST even if the car owner is registered.House Keeping Services (Turnover of hotel less than 20/10 lakh)Urban ClapService provider is not required to register.E-commerce operator will collect GST.House Keeping Services (Turnover of hotel less than 20/10 lakh)Urban ClapService provider is required to register.Service Provider is required to collect GST.Other Service including Food aggregators*Swiggy, Uban Eats, Urban Clap (Beautician)Service provider is required to register if turnover is more than 20/10 lakh.Service provider is required to collect GST if registered. If not registered then GST not applicable.

*Restaurant is considered as a service and not composite supply as per Schedule II of CGST Act.

Also Read – TCS by e-commerce operator

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