E-commerce sellers, both individuals and businesses, thrive by selling goods or services online through platforms like Amazon, Flipkart and eBay. These virtual marketplaces become their stage to engage and engage customers across the vast internet.
The dynamic world of online commerce led the Indian government to bring in specific GST regulations for e-commerce businesses. To comply with the law, e-commerce sellers in India must adhere to the regulations of the GST legislation and stay within its guiding framework. These regulations ensure a fair and transparent digital marketplace for all participants.
GST Registration Requirements for E-Commerce Sellers
Registration Requirements for E-Commerce Sellers Under GST are as given below:
Sellers Selling Goods:
- E-commerce sellers dealing with physical products through platforms like Amazon, Flipkart, etc., must mandatorily register with the CBIC regardless of their turnover being below the threshold limit set by the government.
- Unregistered sellers without GST Identification Number (GSTIN) cannot use these platforms for online selling.
Sellers Selling Services:
- E-commerce businesses supplying services need registration if their annual turnover exceeds Rupees 20 lakhs.
- Certain services like passenger transportation through OLA, Uber, hotel services through aggregators like OYO and housekeeping services through platforms like Urban Company are exempt from mandatory GST registration under section 9(5) of the Central Goods and Services Act, 2017.
Stepwise Process for GST Registration for E-commerce Sellers
The detailed process for GST Registration for E-commerce Sellers is as below mentioned:
- Visit the GST portal: Initiate the registration process by accessing the official GST portal at www.gst.gov.in.
- Click on Services: On the home page, locate and click on the Services tab there, then select Registration from the given options there.
- Fill in the required details: Provide all the necessary information, including PAN, email, mobile number and the state of business therein.
- Upload the required documents: E-commerce sellers must submit essential documents to support their application. These documents typically include PAN card, Aadhaar card, bank statement and proof of address.
- Submit the application: Once all the details and documents are provided, proceed to submit the registration application.
- Verification of application: The GST authorities will review the application and supporting documents to ensure accuracy and compliance. They may request additional information or documents if needed during the verification process.
- Receipt of GST registration certificate: After successful verification, the e-commerce seller will receive the GST registration certificate. This certificate officially acknowledges the seller’s GST registration, allowing them to conduct business within the GST framework.
GST Compliances for E-Commerce Sellers
Some additional compliances Under GST for E-commerce Sellers are mentioned here:
- GSTR 1 and GSTR 3B:
- Depending on the turnover of the e-commerce business, an e-commerce seller needs to submit GSTR 1 and GSTR 3B returns regularly and periodically.
- Small e-commerce sellers with an annual turnover of less than 5 crores can opt for the Quarterly Return Filing and Monthly Payment of Taxes (QRMP) scheme. Under this scheme, they file GSTR-3B returns every quarter but pay taxes every month.
- State-wise Reporting:
- E-commerce sellers, who sell products to consumers all across the country, are required to report the record of their taxable amount and taxes in every state they sell their products, as per their respective rates.
- GSTR 1 needs to be filed for all outward supplies made by the seller during a specific period.
- Summary Returns – GSTR 3B:
- Businesses are also required to file summary returns in the form of GSTR 3B, where they report their business liabilities and Input Tax Credit (ITC) credit claims and reversals.
- These returns are also supposed to be filed state-wise and only in GSTR 3B.
- Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) Credit Claim Return:
- Electronic commerce operators collect TCS from the e-commerce sellers, which is then submitted by the operator in GSTR-8.
- The TCS amount submitted by the e-commerce seller to the operator can later be claimed by the seller as Input Tax Credit (ITC) by filing a claim return.
- Annual Return GSTR-9 and 9C:
- Businesses with a turnover of more than Rupees 2 crores have to file the GST annual return in the form GSTR-9, which is an annual reconciliation statement.
- Businesses with a turnover of more than Rupees 5 crores have to file the GST annual return in the form GSTR-9C, which is an annual reconciliation statement.
- Sales Returns and Credit Notes:
- In the e-commerce business, sales returns by customers are common, leading to an impact on the value of sales, GST liability and ITC credit reversal for the e-commerce seller.
- Therefore, e-commerce sellers must exercise due care while filing GST returns to account for these transactions accurately.
Applicability of TCS and TDS to E-commerce Sellers
Given below is the application of TCS and TDS on e-commerce sellers in India:
Tax Collected at Source (TCS):
- E-commerce operators, such as Amazon and Flipkart, collect TCS at a rate of 1% on the value of supplies made by e-commerce sellers during payment transactions.
- The TCS amount collected by the e-commerce operators is then remitted to the government. Essentially, the operators assist the government in collecting this tax from sellers.
- Upon making sales on these platforms, e-commerce sellers receive their payment after the TCS deduction. However, they can claim the TCS amount as a credit while filing their GST returns, which reduces their overall tax liability.
Tax Deducted at Source (TDS):
- E-commerce operators also carry out TDS, wherein they deduct 1% of the gross sales amount of an e-commerce seller during credit or payment, whichever comes first.
- If the total gross sales of a seller in the previous year do not exceed Rs. 5 lakh, the e-commerce operator is not required to deduct TDS from their payment. In such cases, the sellers receive the full payment.
- To avail this benefit, e-commerce sellers must provide their PAN or Aadhaar number to the operator. This enables the operator to identify eligible sellers exempt from TDS deduction.
- Non-resident e-commerce sellers are exempt from TDS, meaning they do not have this tax deducted from their earnings, irrespective of their sales volume.
Final Thoughts
GST registration is essential for e-commerce sellers in India to comply with tax regulations and operate legally on online platforms. The stepwise process involves visiting the GST portal, providing required details and submitting necessary documents for verification. Understanding eligibility criteria, TCS and TDS on GST is important for e-commerce sellers to avoid penalties.
Compliance with GSTR 1, GSTR 3B and state-wise reporting is necessary to meet GST requirements. E-commerce sellers must also be mindful of TCS and TDS implications on their payment receipts and tax deductions. Adherence to GST regulations ensures a seamless and compliant operation of e-commerce businesses.
For more information on GST registration for e-commerce entities in India, connect with our experts at StartupFino.
