E-commerce operations are growing at the swift pace in India. Every person of this age wish to explore the opportunities in the world of e-commerce.
The primary reason behind the pace of e-commerce is the limitless approach of this model. In this business model, there is no limit to customer base of particular product or service. In particular geographical area, there may not be much demand of a particular product/service, however, when such product/service offered through e-commerce platform, its availability reaches to masses without hindrance. Secondly, it does not require huge investment at all times like in stock, debtors, shop/office location, etc.. A businessman can simply procure orders and then instruct its supplier directly to post the product to customer.
Due to its limitless approach, GST laws are aggressive for E-commerce operations. There are certain examples for that:-
- Every e-commerce operator must get registered itself under GST laws without looking into turnover amount.
- Every person doing business through e-commerce operator must get registered itself under GST laws without looking into turnover amount.
- Some of services are notified where E-commerce operator is liable to collect and pay GST on behalf of the third party suppliers.
- Some of transactions happened through E-commerce operator are liable to ‘TCS’ (i.e. Tax Collection at Source).
As per CGST Act, 2017, E-commerce means the supply of goods or services or both, including digital products over digital or electronic network.
And, “electronic commerce operator” (in short “e-commerce operator”) means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.
In this article, we will discuss various types of e-commerce operators recognised under GST and their registration requirement in the GST law.
Types of E-commerce Operators under GST :-
There are so many confusions among business entities regarding electronic commerce operator. However, under GST, there are three types of e-commerce operators:-
- Any person owning a digital platform (like website/app) for sale or supply of goods or services or both, like ‘Samsung.com’ owned by Samsung company to sell products. In this model, owner sells the goods for himself only, however the goods may be of the brand of others.
- Any person, owning a digital platform, offer the services to suppliers/businessman to sell their goods/services through his platform. In this model, e-commerce operator is also liable for the collection of consideration with respect to such supplies of suppliers (like Flipkart, Amazon, etc.).
- Any person, owning a digital platform, offer the services to suppliers/businessman to supply the notified services through his platform (like OYO, Urbanclap, UBER, OLA).
Whether registration under GST is mandatory for every e-commerce operator ?
Under GST, Section 22 and 24 of CGST Act, 2017 governs the registration requirements under GST. We will go through the requirement for registration one by one for each type of operator.
Type-1 : E-commerce operator sells the goods on his own behalf only
Where e-commerce operator owns, operates or manages a digital facility or platform for his own supplies only, he is acting like a person having a physical point of sale e.g. shop, mall, showroom. In this case, there is no difference between “digital shop” and “physical shop” for the purposes of GST. Like physical shop, the operator can sell anything (legally allowed obviously) from his digital platform for himself. There is no third party involved in selling and buying the goods/services other than operator as seller and customer as buyer.
e.g. Samsung.com is acting synonymous to Samsung stores selling Samsung products over a physical location.
- If the operator is selling goods within the State/UT of his operations, he is not required to get registered himself until he crosses the threshold limit for registration (10 Lakh/20 Lakh/40 Lakh as the case may be). However, if he wishes to supply goods outside the State/UT, he must get register himself before making any supply.
- If the operator is supplying services, he is not required to get registered himself until he crosses the threshold limit (Rs 10 Lakh / 20 Lakh) for registration.
However, in following categories, it is mandatory to get register without looking into above considerations:-
- persons who are required to pay tax under reverse charge; (Refer Notified Goods and Services under Compulsory Reverse Charge)
- persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise.
Type-2 : E-commerce operator provides facility to other suppliers to sell their goods or services other than NOTIFIED services
Common examples of this type of E-Commerce operators are Flipkart, Amazon, Swiggy, Snapdeal, Freecharge, Paytm, Shopclues, etc.
In this model, it is mandatory for such e-commerce operator to get register himself under GST. Further, he is also required to get register for provisions of ‘TCS’ (i.e. Tax Collection at Source) under section 52 of CGST Act, 2017. Here we are excluding those operators who provides digital platform or facility for services notified under section 9(5) of CGST Act, 2017 (refer Type-3 below).
Refer provisions of TCS: Tax Collection at Source (TCS) under GST w.e.f. 1st October 2018
In this category, a supplier supplying goods/services through such e-commerce operator is also under obligation to get himself registered under GST.
Type-3: E-commerce operator provides facility to other suppliers to sell their services NOTIFIED under section 9(5) of CGST Act 2017
In this category, E-commerce operator owns, operates or manages digital facility and provide the same to suppliers dealing in services notified under section 9(5) of CGST Act, 2017.
In this model, it is mandatory for such e-commerce operator to get register himself under GST. It is the responsibility of operator to collect the GST on services supplied by the supplier through his platform. Further, he is responsible to pay the GST so collected to the government.
In this category, a supplier supplying goods/services through such e-commerce operator may or may not required to get registered under GST.
Read in detail regarding these type of operators : Services notified under Section 9(5) of CGST Act 2017