Complete guide of GST impact on E-commerce

If your business is not on the internet, then your business will be out of business…
– Bill Gates
This is what she read somewhere and found it very appealing. She wanted to do something but was completely clueless. But the fire had kindled and there was a will developing in her to do. So she decided to start her own online business. But what to do, was the next big question. After doing some basic research she stumbled upon certain GST policies, whether GST is applied to e-commerce or not, if yes then ….what are the impact of GST on E-commerce? what type of GST applicable on E-commerce sales?
If this is the same scenario with you, hope this article will help you.
The process of buying and selling of goods and services through electronic medium without using any paper document is called as E-commerce. This also include supply of digital products over digital or electronic network. E-commerce in India tried to capture the eye-ball and also the mind space of the customer at vast and in short-span of time there growth was phenomenal.
Electronic commerce operators are those person who operates, or manage their business through digital platform for electronic commerce.
Sellers who sell online using E-commerce platform like Flipcart, Amazon, Snapdeal are more profitable compare to E-commerce operators. The government has been facing several issues, due to rice of this new sector.
In the past it was little difficult to classify E-commerce companies due to the prevalent tax laws. It depends whether the seller is selling product or they are providing a services.
To solve such problem, the new GST rule has been implemented to handle the taxes of e-commerce operators.
Impact of GST on E-Commerce
The level of impact of goods and services tax is high on businesses of sellers registered.
As per the study conducted by the Internet and mobile association of India E-commerce market have crossed Rs. 211,005 Crore in December 2016. By the year 2020 it is expected that India will generate $100 billion through online retail.
In India the E-commerce is highly-raising sector which results to origin of online marketplaces. Online platform is also known as marketplace which is owned by E-commerce operator. For an offline seller it is biggest advantage of sales and reach which is provided by market places.
As there is increase in number of sellers and their business, GST has come up with various rules and regulations to specify the E-commerce segment.
With introduction of new GST rules the online seller community is now being compelled to embrace the GST regime. The following are the GST compliances given below:
Government threshold for GST registration:
The threshold limit for all the businesses is same as per government regulation. Here such limit is not applicable in case of E-Commerce sellers. E-commerce sellers need not have to register GST if there total sales is less than Rs. 20 lakh.
Dis-qualification for Composition Scheme:
In marketplace operators most of the registered sellers are small and medium businesses. Composition scheme has been introduced by the government under GST law. The ultimate aim of this scheme is to reduce the burden of compliance for small and medium businesses. E-commerce businesses are not eligible for the Composition Scheme. Under this scheme, businesses are permitted with a turnover of under Rs. 75 lakh to file quarterly returns instead of monthly and pay taxes at the nominal rates up 2%. This may look like the biggest disadvantage for e-commerce sellers, because the documents required to file composition scheme is relatively high.
According, to GST law the e-commerce businesses are exempted from this scheme.
Tax Collection at Source by E-commerce Operator (TCS):  
As a GST liability the E-commerce operators need to deduct 2% TCS on the net sales as the GST liability of the sellers and must deposit it with government. As per GST law this system is named as “Tax Collection at Source (TCS)”. The E-commerce seller have to file monthly return under GST to claim the credit of TCS collected by the E-commerce operator. This create a great impact on the liquidity and cash flow of these sellers.
Now it is necessary for sellers to start planning their transition strategy for GST regime. At the end of each month the e-commerce market place as well as the seller need to tally the sales report. The added turnover of the seller and they will be liable to pay GST on the additional amount.
Type of GST applicable on E-commerce sale:
In previous tax laws, there were no proper definition of online sales. Now GST has come up with clear rules and regulation in place for E-commerce portals.
Digital goods:
Selling digital goods will be treated as services.
Place of supply:
GST is location based tax that means the goods or/and services will be levy at the place where they are consumed. As per law under GST the place of supply of goods define whether the transaction will be from inter-state or intra-state and accordingly taxes of CGST & SGST
This makes the concept of place of supply crucial under GST as all provisions of GST revolves around it.
The supplier of e-commerce platform whether it is registered taxable person or unregistered persons they have to maintain their invoice-wise details of supplies and the aggregate value of supplies.
Therefore, it is must to raise GST complaint Invoices.
Here are some important points which are mentioned in GST Invoice –

  • Customer name
  • Invoice number and date
  • Shipping and billing address
  • Customer GSTIN
  • Place of supply
  • HSN code/ SAC code
  • Taxable value and discounts
  • Rate and amount of taxes i.e. CGST/ SGST/ IGST
  • Signature of the supplier
See also  Petrol to not come under GST: rising fuel prices are no new

Here, in this article we have mentioned the Impact of GST on E-commerce, type of GST applicable in E-commerce. Hope this article will solve all your doubts.

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