Provision in GST with respect to E Commerce

1. TAX ALERT
ALERT TOPIC
Alert 02/2017
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PROVISION IN GST WITH
RESPECT TO E - COMMERCE

2. TAX ALERT
ALERT TOPIC
Alert 02/2017
A-81,Ground Floor, Sector
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team@ecapartners.in
Electronic Commerce or e-commerce has transformed the way business is done in India. Currently, the e-
commerce industry in India is faced with the levy of multiple taxes. Every state has imposed its own set of
rules and taxes on the e-commerce industry. The lack of clarity on the tax treatment of the various types of
e-commerce transactions, and new aspects such as e-wallet and cashbacks, has resulted in a chaotic tax
environment for the industry.
E-commerce firms are looking forward to the implementation of GST in the hope of greater clarity, and
removal of state specific rules and levies. The draft Model GST Law recognizes the need for rules specific
to the e-commerce industry. In this presentation, we will look at the specific provisions with respect to e-
commerce in GST.
• The e-commerce operator and
• Suppliers on e-commerce platforms
E-Commerce Operator
An e-commerce operator is a person who owns, operates or manages digital or electronic facility or platform
for electronic commerce. The requirements from an e-commerce operator under GST are-
1. Mandatory registration
All e-commerce operators are mandatorily required to register under GST. This means that irrespective of
their turnover, they must register under GST.

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2. Tax to be paid by e-commerce operator on notified services
Certain service categories may be notified, on supply of which, tax shall be paid by the e-commerce
operator, and not the supplier. In this respect,
• If the e-commerce operator does not have an establishment in a state, any person representing the e-
commerce operator for any purpose in the state will be liable to pay the tax
• If the e-commerce operator does not have an establishment in a state, and also does not have a
representative in the state, the e- commerce operator should appoint a person in the state for the purpose
of paying tax, and this person shall be liable to pay the tax.
3. E-commerce operator has to collect tax at source
Every e-commerce operator should collect tax @ 1% on the net value of taxable supplies made through their
platform, where the consideration, with respect to such supplies, has to be collected by the operator.
Example: X Limited is an e-commerce operator. Y and Z are suppliers on X. The following supplies are
made on X in October ’17
Outward Supply register of X
Supplier Taxable supply Taxable supply return Net taxable supply Tax collected @ 1%
Y 100 10 90 .90
Z 200 20 180 1.80
Total 300 30 270 2.70

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4. Returns and tax payment process
• On 10th of a month, an e-commerce operator has to furnish Form GSTR-8 containing details of outward
supplies made through the platform in the previous month, including supplies returned. In Form GSTR-
8, invoice-wise details of supplies to registered taxable persons and aggregate value of supplies to
unregistered persons must be provided. The e-commerce operator also has to pay the tax collected from
suppliers.
On November 10, 2017, X Limited furnishes Form GSTR 8 showing net taxable supplies made through
the platform of Rs. 270. They also pay Rs. 2.70 as tax collected from suppliers
November
10
2017
Form GSTR - 8GSTN
X
Limited
Net Taxable
supplies Rs
270
Pay tax
collected from
suppliers Rs.
2.70

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• On 21st of a month, any discrepancy between supplies reported by the e-commerce operator and
suppliers on the platform is made available in Form GST ITC-1. The discrepancy must be rectified in the
return for the month in which it is communicated. In the above example, X Limited furnishes Form
GSTR-8 for October’s supplies on 10th November ’17. If a discrepancy is reported in Form GST ITC-1
on 21st November ‘17, it must be rectified in the return for November ’17, to be filed on 10th December
’17.
Suppliers on e-commerce platforms
1. Mandatory registration
All suppliers on e- commerce platforms are mandatorily required to register under GST. Hence, even e-
commerce suppliers whose aggregate turnover does not exceed the threshold limit for registration will have
to compulsorily register
2. Non-eligibility for Composition Scheme
A person who supplies goods or services through an e-commerce operator will not be eligible for
registration under composition Scheme. Hence, even if the person’s aggregate turnover does not cross Rs. 75
Lakhs, he/she does not have the option to become a composition tax payer.
3. Returns process
• On 10th of a month, a supplier has to furnish Form GSTR-1 containing details of outward supplies made
through e-commerce platforms. In Form GSTR-1, invoice-wise details of supplies to registered taxable
persons and aggregate value of supplies to unregistered persons made through the e-commerce platform
must be provided.

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• On 11th of a month, Form GSTR-2A will be made available to the supplier. The aggregate amount of tax
collected by e-commerce operators in the previous month will be auto populated, based on Form GSTR-
8 filed by the e-commerce operators.
On November 10, 2017, Y & Z furnishes Form GSTR 1 showing net taxable supplies made through the X
Limited
GSTN
November
10
2017
Form GSTR - 1
Net Taxable
supplies Rs 90
Net Taxable
supplies Rs
180
Y
Limited
Z
Limited

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On November 11, 2017, Form GSTR 2A is made available to Y & Z. In form GSTR 2A, aggregate
amount of tax collected by X limited will be auto populated, based on Form GSTR 8 filled by X Limited
GSTN
November
11
2017
Form GSTR – 2A
Tax credit
received Rs.
.90
Tax credit
received Rs.
1.80
Y
Limited
Z
Limited
X Limited
Form GSTR 8

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• On 15th of a month, a supplier has to furnish Form GSTR-2, in which the details of tax collected by the
e-commerce operator can be accepted or modified. The tax collected will be credited to the supplier’s
electronic cash ledger on provisional basis, which can be set-off against the tax liability
• On 21st of a month, Form GST ITC-1 is made available to a supplier. Any discrepancy in supplies
furnished with supplies reported by the e-commerce operator will be shown. The discrepancy must be
rectified in the return for the month in which it is communicated. If not rectified and the value of
supplies furnished by the operator is more than the value furnished by the supplier, the differential
amount along with interest will be added to the tax liability of the supplier for the succeeding month.
In the above example, Y Limited furnishes Form GSTR-1 for October’s supplies on 10th November ’17.
If a discrepancy is reported in Form GST ITC-1 on 21st November ‘17, it must be rectified in the return
for November ’17, to be filed on 10th December ’17.
If you have any query with regard to GST, We are happy to help you any time.
Best Regards
ECA Team