According to Section 2(44) of CGST Act, 2017, ‘Electronic Commerce means the supply of goods and services or both, including digital products over digital or electronic network’.
An activity of buying or selling of products through the Internet, without having physical business premises in the taxable territory.
According to Section 2(45) of CGST Act,2017, “Electronic Commerce Operator” means any person who owns, operates, or manages digital or electronic facility or platform for Electronic Commerce” activity.
In an E-commerce transaction, there are 3 parties. They are (i). Supplier,(ii).Buyer and (iii). E-Commerce Operator. There are 2 distinct transactions.
(i). Transaction between the supplier and Buyer for the supply of goods or services and
(ii)Transactions between the supplier and E-commerce operator for a commission charged for the use of the marketplace.
Provisions relating to Registration of E-Commerce Operator under GST:
As per Section 24 of the CGST Act,2017, notwithstanding anything contained in section 22(1) of the GST Act, the threshold limit of having turnover of Rupees. 20 Lakh and above is not applicable to the following persons:
Section 24(ix) of CGST Act,2017,” Person who supply goods or services or both, other than supplies specified under sub-section(5) of section 9, through such electronic commerce operator who is required to collect tax at source under section 52 and;
Section 24(x) every Electronic Commerce Operator (who is required to collect tax at source under Section 52)
It means the E-commerce operator and the person doing business through the E-commerce operator and collecting TCS, shall be compulsorily registered under GST Act even if their Taxable and exempted turnover is less than Rupees. 20 lakh.
As per Circular No. 167/23/2021-GST, dated 17.12.2021, It has been clarified that tax on supplies of restaurant services supplied through e-commerce operators shall be paid by the e-commerce operator from 1st Jan 2022, and for this ECO is not required to take separate registration if they are registered earlier. As restaurant services have been notified under section 9(5) of CGST Act, 2017.
Other transactions notified under Sec. 9(5) of the CGST Act,2017 and Sec.5(5) IGST Act,2017, where the E-Commerce Operator is required to pay the GST on behalf of the suppliers.
| S. No | Category of supply of Specified Service | Services provided by Supplier |
| 1 | services by way of transportation of passengers by a radio-taxi, motorcab, maxicab, motor cycle, omnibus or any other motor vehicle;
Explanation (a) of 17/2017-CTR “radio taxi” means a taxi including a radio cab, by whatever name called, which is in two way radio communication with a central control office and is enabled for tracking using Global Positioning System (GPS) or General Packet Radio Service (GPRS); Explanation (b) of N.no. 17/2017-CTR “maxicab”, “motorcab” , motor cycle, motor vehicle and omnibus shall have the same meanings as assigned to them respectively in clauses (22), (25), (27), (28) and (29) of section 2 of the Motor Vehicle Act, 1988 (59 of 1988)]. |
(N.No.17/2017-Central Tax (Rate) dt.28.06.2017) as amended by N.no. 17/2021-Central Tax (Rate) dt. 18.11.21, w.e.f 1.1.22 |
| 2 | Providing accommodation in hotels, Inns, Guest Houses, Clubs, Campsites or other commercial places meant for residential or lodging purposes. | Any person except those who are liable to obtain GST registration under Sec.22 (1) of the CGST Act,2017.( N.No.12/2017 –Central Tax (Rate) dt.28.6.2017) |
| 3 | House-keeping such as Plumbing, Carpentering etc., | Any person except those who are liable to obtain GST registration under Sec.22 (1) of the CGST Act,2017.( N.No.23/2017 –Central Tax (Rate) dt.22.8.2017) |
| 4 | supply of restaurant service other than the services supplied by restaurant, eating joints etc. located at specified premises Explanation (c) of Notification no. 17/2017-CTR specified premises means premises providing hotel accommodation service having declared tariff of any unit of accommodation above seven thousand five hundred rupees per unit per day or equivalent.] |
Notification No. 17/2021- Central Tax (Rate), dated 18-11-2021, w.e.f. 1-1-2022. |
Bills raised by E-Commerce Operator:
(i) Any supply that is not notified under Section 9(5) of CGST Act, 2017, is supplied by a person through E-Commerce Operator, the liability to pay GST continuous on such supplier and E-Commerce Operator shall continue to pay TCS on such supplies.
(ii) Where E-Commerce Operator is supplying restaurant services and other services then in that case, he should raise separate bills on restaurant services.
The claim of ITC by E-Commerce Operator:
(i). The E-Commerce Operator provide their own services as an electronic platform and an intermediary for which it would acquire inputs/input service on which E-Commerce Operators avail Input Tax Credit. On supplies (other than Restaurant Services made through ECO) the GST Tax is collected and deposited by ECO as it is done by the other suppliers. E-Commerce Operator will deposit TCS on such supplies.
(ii). The E-Commerce Operator shall pay the entire GST tax liability in cash only w.r.t restaurant services supplied through E-Commerce operator that means no input tax credit could be utilized for payment of GST.
Forms to be filed by ECO on GST Portal:
The E-Commerce Operator has to file the following GST Returns in respective months as below:
Form GSTR-1, Form GSTR-3B, Form GSTR-8 and Form GSTR-9 and Form GSTR-9B.
(i). An E-Commerce Operator is required to submit an electronic statement i.e. Form GSTR-8. This Form should contain details of outward supplies of goods and/or services delivered by supplies through its marketplace, net of returns, along with the TCS during the calendar month.
Form GSTR-8 should be submitted within 10 days from the end of the calendar month in which the tax was collected. The Form GSTR-08 return will only be filed once the tax collected, has been deposited to the respective credit of the Government.
(ii). The ECO is also required to file an annual return in Form GSTR-9B by the 31st December following the end of the financial year, in which the transactions which have taken place and the tax collected at source (TCS) have to be shown.
(iii). TCS deposited by E-Commerce Operator will appear in Form GSTR-2A-at PART-C on the GST Portal of the supplier. The supplier can use this TCS credit to discharge their GST liability as the amount after the claim of TCS gets collected in the Cash ledger of the supplier.
Generally, return goods are common in ECO for buyers to return the goods that have been purchased. In case the sales returns for a supplier are more than the sales in a calendar month, then ECO is not required to collect TCS.
(iv). An E-Commerce Operator may, on services notified under Sec.9(5) of the CGST Act,2017, including “Restaurant Services “ provided through ECO, may continue to pay GST by furnishing the details in Form GSTR-3B, reporting them as outward taxable supplies. Besides, E-Commerce Operator shall furnish the details of such supplies of restaurant services under section 9(5) in Table-7A(1) or Table 4A of Form GSTR-1, as the case may be, for accounting purposes. The Registered persons supplying restaurant services through E-Commerce Operators under Sec.9(5) will report such restaurant services made through ECO in Table 8 of Form GSTR-1.
ECO operators are presently paying GST by furnishing details in GSTR 3B. ECO may continue to pay GST by furnishing the details in GSTR 3B, reporting them as outward taxable supplies in Column (i) of Column 3.1.1 of Form GSTR 3B. Whereas the supplies made by the person under section 9(5) through ECO shall be reported by the registered person in Column (ii) of Column 3.1.1 of Form GSTR 3B (Notification no. 14/2022-Central Tax, dated 5.7.22).
The government is desirous of making the system more transparent there for the supplies made through ECO have to be shown in Form GSTR 3B. Only the taxable value has to be shown for supplies made through ECO and in the case of Supplies by ECO – the taxable value, as well as the tax on it, has to be shown.
Tax Collected at Source (TCS)
According to Sec.52 of CGST Act,2017,” Tax Collected at Source under GST Act means, the tax collected by an E-Commerce Operator from the consideration received by it on behalf of the supplier of goods or services who makes supplies through the operators online platform”. TCS will be charged @1% on the net taxable supplies. Those who own, operate and manage E-Commerce Platforms are liable to collect TCS. TCS applies only if the operators collect the consideration from the customers on behalf of vendors or suppliers.
As per Notification No.52/2018 –Central Tax, dated 20.9.18, The dealers or traders supplying goods and/or services through E-Commerce Operators will receive payment after deduction of TCS on Inter-State Transactions @1% or Intra State Transactions @0.5% CGST and @0.5% SGST.
Conditions in which no TCS will be applicable
(i). Tax Collected at Source (TCS) provisions are not applicable to the import of goods or services.
(ii). If the supplier sells their products through their own electronic portal, TCS is not required.
(iii). If a supplier sells exempted goods or Zero-rated goods through the marketplace of an E-Commerce Operator, no tax shall be collected at the source as the net taxable value of the goods is NIL.
