A detailed analysis on GST Impact on E-Commerce Industry in India was presented below. Over the past few years it is noticed that the e-commerce industry is continuously expanding its business activities across India. According to a report from the Associate Chambers of Commerce and Industry of India (ASSOCHAM), India’s e-commerce industry is likely to touch the US $ 38 billion in 2016.
From the view point of the government, it is very much significant that this continuously growing industry is properly brought in the purview of direct and indirect taxation
However, due to several complications in the business model adopted in this industry, there are certain difficulties faced to impose taxes under current legislation. Special consideration has been provided for the taxation of e-commerce transactions under Model GST Law.
The provisions for taxation of e-commerce transactions under Model GST Law are as follows
Meaning of Major Terms
As per section 43B(d) of Model GST Law, Electronic Commerce means
- The supply or receipt of Goods and/ or Services; or
- Transmitting of Funds or Data, over an electronic network, primarily the internet;
- By using any of the applications that rely on the internet, like but not limited to e-mail, instant messaging, shopping carts, web services, universal description Discovery and integration (UDDI), File Transfer Protocol (FTP) and Electronic Data Interchange (EDI)
- Whether or not the payment is conducted online and
Whether or not the ultimate delivery of the goods and/ or services is done by the operator
Thus it can be interpreted that any transaction of Goods, Services, Funds or Data over an electronic network by using any application that rely on internet irrespective of the mode of payment and delivery by the operator shall be classified as electronic commerce.
As per section 43B (e) of Model GST Law, Electronic Commerce Operator (Operator) shall include:
Every person who directly or indirectly, owns, operates or manages an electronic platform, which is engaged in Facilitating the supply of any goods and/or services or Providing any information or any services incidental to or in connection with supply of goods and services i Would be considered as an Operator.
However, a person supplying goods/ services on his own account, would not be considered as an Operator.
For e.g. Titan Supplying watches through its own website would not be considered as e-commerce operator.
The same shall also be applicable for products sold by e-commerce under his own account.
For e.g., Amazon (an e-commerce operator) selling its product “Kindle” through its website. Thus, Amazon would not be treated as e-commerce operator for its product “Kindle” under Model GST Law.
As per section 43B (a) of Model GST Law, aggregator means, A person, who owns and manages an electronic platform, and By means of the application and communication device Enables a potential customer to connect With the persons providing service of particular kind Under the brand name or trade name of the said aggregator.
For e.g. Ola cabs would be an aggregator
Registration of E-commerce operators/ aggregators under Model GST Law
As per section 19, read with Schedule III of Model GST Law
- The registration of e-commerce operators and aggregators are mandatory under MGL
- The threshold exemption limit is not applicable to the e-commerce operator and aggregator.
Thus, the e-commerce operators and aggregators are required to be registered irrespective of the value of supply made by them.
Registration of supplier of Goods/Services supplying through e-commerce operator under Model GST Law ( MGL)
As per section 19, read with Schedule III of Model GST Law
- The registration of supplier of Goods/Services supplying through e-commerce operator are mandatory under MGL
- The threshold exemption limit is not applicable to the supplier of Goods/ Services supplying through e-commerce operator
Thus, the supplier of Goods/Services supplying through e-commerce operator is required to be registered irrespective of the value of supply made by them.
Tax Collection at Source
As per section 43C (1) of Model GST Law, The e-commerce operator is required to collect (i.e. deduct) an amount Out of the consideration paid or payable To the actual supplier of goods or services In respect of supplies of goods or services made through such operator.
The amount so deducted/collected is called as Tax Collection at Source.
Point of tax collection/deduction
The timings for such collection/deductions shall be earlier of the following:
- The time of credit of any amount to the account of actual supplier of goods and / or services;
- The time of payment of any amount in cash or by any other mode to such supplier.
Due date for payment of tax and filing of returns
As per section 43C (3) of Model GST Law, the due date for making credit of tax in account of appropriate government and filing of returns are as follows:
|Payment of Tax||Filing of returns|
|10th of next month||10th of next month|
The return shall consist of
- Name of the actual supplier(s)
- Details of respective supplies made by them; and
- Amount collected on their behalf.
Utilization of claim on TCS by actual supplier
The TCS which is deposited by the operator in the government account shall be reflected in the cash ledger of the actual registered supplier on the basis of return filed by the operator
This balance can be used at the time of discharge of tax liability in respect of supplies by the actual supplier.
The Concept of Matching
As per section 43C (6) of Model GST Law,
The details of supplies and amount collected by an operator Furnished by every operator in his statement Will be matched with the corresponding details of outward supplies furnished by the concerned supplier under section 27.
In case of any discrepancy noticed, the discrepancy shall be communicated to both persons
Provisions if the details remained mismatched
As per section 43C (8), in case
- Where any discrepancy communicated and not rectified by the supplier in his valid return,
- For the month in which discrepancy is communicated,
- The value of a supply resulting in such discrepancy,
- Shall be added to the output liability of the said supplier,
- For the calendar month succeeding the calendar month in which discrepancy is communicated.
The concerned supplier shall be liable to pay tax payable on such supply together with interest at specified rate from the date such tax was due till the date of payment.