GST on E-Commerce

Impact of GST on E-Commerce

About GST On E-Commerce 

The E-commerce or EC industry is growing immediately in the country where buying or selling of goods and services, and the transmitting of data or funds over an electronic network. There are two types of EC sellers.

  1. Companies such as Amazon, Flipkart, Myntra and Paytm are some of the largest e-commerce players: it is an entity which owns, operates or manages digital or electronic facility or platform for E-commerce
  2. Suppliers on EC platform: It is an entity which supplies goods or services through an EC platform.


Return Filing under GST for Ecommerce


Particulars E-commerce operator Suppliers on E-commerce platforms
Meaning A person who owns, operates or manages the digital or electronic facility or platform for electronic commerce. Who supplies goods or services on an e-commerce platform.
Registration All EC operators are essentially required to get registration under GST irrespective of their turnover. All suppliers on EC platforms are essentially required to register under GST along with even those EC suppliers whose aggregate turnover does not exceed the threshold limit for registration.
Return Filing By 10th of every month, an EC operator has to furnish GSTR-8 Form containing details of outward supplies made through their platform by suppliers in the previous month. By 10th of every month, suppliers have to furnish the details of their outward supplies through EC platforms.

By 15th of every month, supplier has to furnish GSTR 2 Form, in which the details of tax collected by the EC operator can be accepted or modified from GSTR 2A which is auto-populated from GSTR 8 Form

By 20th of every month, he/she shall file the return and discharge his tax liability on the supply of goods through EC or Credit Ledger.

GST-induced taxation changes for e-commerce sellers

After all, GST as a single tax for products across India will be profitable for all EC sellers in the long run because of the aspect of transparency in trade brought forth by this new indirect tax reorganize. Now we discuss the impact of GST on an online seller’s (EC):

  1. Increased reach of e-commerce sellers:

    GST has opened the outlet for small and medium-sized EC sellers to compete with larger enterprises at a national level.Long ago, these sellers were limited to operating within the one state due to the looming tax rates of trading across multiple states

  2. Compulsory registration required:

    The government has specified a turnover threshold of Rs 20 lakh for registration under GST. This has been relaxed to Rs 10 lakh for north-eastern states.

  3. Ineligible for Composition Scheme:

    EC sellers are Ineligible(Not Eligible) for the Composition Scheme. The Composition Scheme permits businesses with a turnover of under Rs 75 lakh to file the return quarterly instead of monthly and pay tax at a low rate of 2%. Although it might look to be a disadvantage for EC sellers, the number of documents required to file for the Composition Scheme is relatively higher, reducing the burden of document collation on the seller.

  4. Tax collected at source (TCS):

    EC marketplaces are required to deduct 2% TCS on the net value of sales as the GST liability of the seller and deposit it with the government. Further, the sales reported by both the EC marketplace as well as the seller need to tally at the end of each month.

  5. Filing of tax returns:

    GSTR-1 Form, containing details of outward supplies, needs to be submitted by the 10th of every month. The seller will receive GSTR-2A  Form by the 11th of the same month, which consist of details of the tax collected by the EC marketplace. They then need to review and submit GSTR-2 Form by the 15th of the month.

  6. Increase in Credit:

    The GST law has well-established ‘input tax credit or ITC’ to cover goods or services used by a company in course of business. EC sellers need to establish a direct relationship between the input material and the final product and service are eliminated.

  7. Refunds under cash on delivery:

    Consumers broadly opt for ‘cash on delivery’ in India and such sales witness return of orders to the tune of 18%. The reconciliation process for refunds takes around 7-10 days. Initially, there might be confusion around generating refunds for canceled orders where taxes have already been filed.

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