E-Commerce

1: What is Electronic Commerce?

Answer: Electronic Commerce has been defined in Sec. 2(44)
of the CGST Act, 2017 to mean the supply of goods or services
or both, including digital products over digital or electronic
network.

2: Who is an e-commerce operator?

Answer: Electronic Commerce Operator has been defined
in Sec. 2(45) of the CGST Act, 2017 to mean any person who
owns, operates or manages digital or electronic facility or
platform for electronic commerce.

3: Is it mandatory for e-commerce operator to obtain registration?

Answer: Yes. As per Section 24(x) of the CGST Act, 2017 the
benefit of threshold exemption is not available to e-commerce
operators and they are liable to be registered irrespective of
the value of supply made by them.

4: Whether a person supplying goods or services through e-commerce operator would be entitled to threshold exemption?

Answer: No. Section 24(ix) of the CGST Act, 2017 lays down
that the threshold exemption is not available to such persons
and they would be liable to be registered irrespective of the
value of supply made by them. This requirement is, however,
applicable only if the supply is made through such electronic
commerce operator who is required to collect tax at source
under section 52 of the CGST Act, 2017. However, where the
e-commerce operators are liable to pay tax on behalf of the
suppliers under a notification issued under section 9 (5) of the
CGST Act, 2017, the suppliers of such services are entitled for
threshold exemption.

5: Will an e-commerce operator be liable to pay tax in respect of supply of goods or services made through it, instead of actual supplier?

Answer: Yes, but only in case of services notified under Sec.
9(5) of the CGST Act, 2017. In such cases tax shall be paid
by the electronic commerce operator if such services are
supplied through it and all the provisions of the Act shall apply
to such electronic commerce operator as if he is the supplier
liable to pay tax in relation to the supply of such services. A
similar provision for inter-State supply is provided for in Sec.
5(5) of the IGST Act, 2017.
(Refer to Notification No. 17/2017 Central Tax (Rate) and 14/2017-
Integrated Tax (Rate) dated 28.06.2017).

6: Will threshold exemption be available to electronic commerce operators liable to pay tax on notified services?

Answer: No. Threshold exemption is not available to
e-commerce operators who are required to pay tax on notified
services supplied through them.

7: What is Tax Collection at Source (TCS)?

Answer: The e-commerce operator is required to collect an
amount at the rate of one percent (0.5% CGST + 0.5% SGST) of
the net value of taxable supplies made through it, where the
consideration with respect to such supplies is to be collected
by such operator. The amount so collected is called as Tax
Collection at Source (TCS). (Refer to Section 52(1) of the CGST
Act, 2017).

8: It is very common that customers of e-commerce companies return goods. How these returns are going to be adjusted?

Answer: An e-commerce company is required to collect tax
only on the net value of taxable supplies. In other words,
the value of supplies which are returned are adjusted in the
aggregate value of taxable supplies. (Refer to Explanation to
Sec. 52(1) of the CGST Act, 2017).

9: What is meant by “net value of taxable supplies”?

Answer: The “net value of taxable supplies” means the
aggregate value of taxable supplies of goods or services or
both, other than the services on which entire tax is payable
by the e-commerce operator, made during any month by all
registered persons through such operator reduced by the
aggregate value of taxable supplies returned to the suppliers
during the said month. (Refer to Explanation to Section 52(1)
of the CGST Act, 2017).

10: Is every e-commerce operator required to collect tax on behalf of actual supplier?

Answer: Yes, every e-commerce operator (other than an
operator required to pay tax under section 9(5) of the CGST
Act, 2017) is required to collect tax where consideration with
respect to a taxable supply is collected by such e-commerce
operator. (Refer to Section 52(1) of the CGST Act, 2017).

11: What time should the e-commerce operator make such collection?

Answer: The e-commerce operator should make the
collection during the month in which the consideration
amount is collected from the recipient.

12: What is the time within which such TCS is to be remitted by the e-commerce operator to Government?

Answer: The amount collected by the operator is to be paid
to the government within 10 days after the end of the month
in which amount was so collected. (Refer to Section 52(3) of
the CGST Act, 2017).

13: How can actual suppliers claim credit of this TCS?

Answer: The amount of TCS paid by the operator to the
government will be reflected in the GSTR-2 of the actual
registered supplier (on whose account such collection
has been made) on the basis of the statement filed by the
operator. The same can be used at the time of discharge of tax
liability in respect of the supplies made by the actual supplier.
(Refer to Section 52(7) of the CGST Act, 2017).

14: Is the e-commerce operator required to submit any statement? What are the details that are required to be submitted in the statement?

Answer: Yes, every operator is required to furnish a
statement, electronically, containing the details of outward
supplies of goods or services effected through it, including
the supplies of goods or services returned through it, and the
amount collected by it as TCS during a month within ten days
after the end of such month. The statement will be filed in
FORM GSTR-8. The operator is also required to file an annual
statement by 31st day of December following the end of the
financial year in which the tax was collected. (Refer to Section
52(4) and Section 52(5) of the CGST Act, 2017).

15: What is the concept of matching in e-commerce provisions and how it is going to work?

Answer: The details of supplies furnished by every operator
in his statement for the month will be matched with the
corresponding details of outward supplies furnished by the
concerned supplier in his valid return for the same month or
any preceding month. Where the details of outward supplies
declared by the operator in his statement do not match
with the corresponding details declared by the supplier, the
discrepancy shall be communicated to both persons. (Refer to
Section 52(8) and Section 52(9) of the CGST Act, 2017).

16: What will happen if the details remain mismatched?

Answer: The amount in respect of which any discrepancy is
communicated and which is not rectified by the supplier in his
valid return or the operator in his statement for the month in
which discrepancy is communicated shall be added to the output
liability of the said supplier in his return for the month succeeding
the month in which the discrepancy is communicated. The
concerned supplier in whose output tax liability any amount has
been added, shall be liable to pay the tax payable in respect of
such supply along with interest on the amount so added from
the date such tax was due till the date of its payment. (Refer
to Section 52(10) and Section 52(11) of the CGST Act, 2017).

17: Are there any powers given to tax officials under the GST Act to seek information on supply/stock details from e-commerce operators?

Answer: Yes. Any officer not below the rank of Deputy
Commissioner may issue a notice to the electronic commerce
operator to furnish such details within a period of 15 working
days from the date of service of such notice. (Refer to Section
52(12), (13) and (14) of the CGST Act, 2017).

18: The sellers supplying goods through e-Commerce operators (ECO) may have common places of business, especially if their goods are stored in a shared facility operated by the ECO. This will result in the same additional place of business being registered by multiple suppliers. Is this allowed?

Answer: Yes, this is allowed. Any registered person can
declare a premises as a place of business if he has requisite
documents for use of the premises as his place of business
(like ownership document, agreement with the owner etc.)
and there is no restriction about use of a premises by multiple
persons. The registered person shall have to comply with the
requirements of maintaining records as per section 35 of the
CGST Act, 2017 and Rules 56 to 58 of the CGST Rules, 2017.

19: Do travel agents providing services through digital or electronic platform qualify as ECOs? Will they be required to collect tax at source as per the provisions of Section 52 of the GST Act?

Answer: Online travel agents providing services through
digital or electronic platform will fall under the category of
ECOs liable to deduct TCS under Section 52 of the CGST Act,
2017.

20: There are transactions in which two or more ECOs are involved. In such cases who would deduct the TCS?

Answer: In such cases, each transaction needs to be treated
separately and examined according to the provisions of Section
52 of the CGST Act, 2017. The TCS will be deducted accordingly.

21: There are cases in which the ECO does not provide invoicing solution to the seller. In such cases, invoice is generated by the seller and received by the buyer without ECO getting to know about it. The payment flows through the ECO. In such cases, on what value is TCS to be collected? Can TCS be collected on the entire value of the transaction?

Answer: Section 52(1) of the CGST Act, 2017 mandates that
TCS is to be collected on the net taxable value of such supplies
in respect of which the ECO collects the consideration. The
amount collected should be duly reported in GSTR-8 and
remitted to the Government. Any such amount collected
will be available to the concerned supplier as credit in his
electronic cash ledger.

22: GST requires a dealer to maintain a consecutive serial number for invoices. If we are supplying from multiple locations, do we need to centrally maintain the invoice numbers serially?

Answer: Section 46 of the CGST Rules, 2017 provides that
invoice may have “a consecutive serial number not exceeding
sixteen characters, in one or multiple series, containing
alphabets or numerals or special characters hyphen or dash
and slash symbolised as “-” and “/” respectively, and any
combination thereof, unique for a financial year”. Therefore, a
supplier can have multiple series for the same year, so long as
the same series is not used across financial years. Therefore,
you may have a different invoice series for each location
having consecutive serial numbers running across that series.

23: There are sellers who are selling exempted or zero-tax goods like books through ECOs. Will marketplaces be required to collect TCS on such supplies?

Answer: As per Section 52(1) of the CGST Act, 2017 TCS is
to be collected on “the net value of taxable supplies” made
through an ECO. When the supply itself is not taxable, the
question of TCS does not arise.

24: I am a supplier selling my own products through a web site hosted by me. Do I fall under the definition of an “electronic commerce operator”? Am I required to collect TCS on such supplies?

Answer: As per the definitions in Section 2 (44) and 2(45)
of the CGST Act, 2017, you will come under the definition of
an “electronic commerce operator”. However, according to
Section 52 of the Act, TCS is required to be collected on the
net value of taxable supplies made through it by other
suppliers where the consideration is to be collected by the
ECO. In cases where someone is selling their own products
through a website, there is no requirement to collect tax at
source as per the provisions of this Section. These transactions
will be liable to GST at the prevailing rates.

25: We purchase goods from different vendors and are selling them on our website under our own billing. Is TCS required to be collected on such supplies?

Answer: No. According to Section 52 of the CGST Act, 2017,
TCS is required to be collected on the net value of taxable
supplies made through it by other suppliers where the
consideration is to be collected by the ECO. In this case, there
are two transactions – where you purchase the goods from
the vendors, and where you sell it through your website. For
the first transaction, GST is leviable, and will need to be paid to
your vendor, on which credit is available for you. The second
transaction is a supply on your own account, and not by other
suppliers and there is no requirement to collect tax at source.
The transaction will attract GST at the prevailing rates.