GST Registration

GST Registration for Ecommerce Collecting TCS

In this article, we are talking about GST registration for Ecommerce collecting TCS. This means that the tax collected by an e-commerce operator has received the consideration on behalf of the supplier of the goods, or services, which makes the supplies through the online platform, where ecommerce has GST registration. Here, TCS will be chargeable on the percentage of the net taxable goods supplied. This is TCS under GST.

This also means, where the E-commerce operator, traders or dealers selling goods or services, have to get GST registration, even if their annual turnover is less than 20 Lakhs, for claiming tax deducted by aggregators.

As we know, those e-commerce operators are collecting GST and depositing GST tax @1% from each transaction, and the dealers get paid only after deduction of 1%.

What is an Ecommerce?

According to Section 2(44) of CGST Act, 2017, a supply of goods or services or both includes digital products, over digital network or electronic network. In other words, supply of goods or services via electronic mode.

Who is an Ecommerce Operator?

Section 2(45) of the CGST, means any person who owns, operates, or manages digital or electronic facility or platform for electronic commerce.

What is GST registration for Ecommerce?

1. According to section 24(ix) of the Central Goods and Services Act, 2017, every person who is supplying goods or services, through electronic commerce, are required to be compulsorily registered, without any threshold limit.
2. The position concerning services is that,

• The person is supplying services except those mentioned in Section 9(5) of CGST Act, are required to get GST registration for ecommerce and collect GST if the turnover is more than the threshold limit.
• Those service providers who are covered under section 9(5) not liable to get registered in GST, their operator is responsible to pay to.
• However the person supplying through ecommerce operators are compulsorily required to get them registered under GST irrespective of turnover.

All the members who are selling through the ecommerce operators have to get their GST registration for the commerce, irrespective of the supplies made by them.

Also, in the services’ case, the ecommerce operator is liable to pay taxes, on behalf of the supplier. This means if the services are supplied through the online platform, all the provisions of the GST Act shall apply accordingly on the commerce operator. Considering, he is the supplier for the services. This has been notified under section 9(5) of the CGST Act, 2017.

What is TCS?

TCS means where the ecommerce operator collects the amount of tax when the supplier who is supplying through the required goods or services through his portal.

According to the section 52 of the CGST Act, 2017^[1], this incorporates the provision of TCS, as it is the most essential provision for ecommerce transactions. As per the Section 52, the TCS operator will deduct 1% TCS before making payments to the supplier or vendor. This value shall be used for computing the net worth of taxable supplies. 

According to the act, the “net value of taxable supplies” mean that the, aggregate value of taxable supplies of goods or services or both, excluding the services on which entire tax is payable by the e-commerce operator. This is made during any month by all registered persons through such operator reduced by the aggregate value of taxable supplies which is returned to the suppliers during the said month.

Applicability of TCS under GST registration for Ecommerce

The question is whether TCS- Tax Collected at Source is applicable to every individual in the GST regime. There are only certain operators who are liable to collect TCS under the GST registration for ecommerce sellers.

Applicable to:

• When the ecommerce operator collects the consideration from customers on behalf of the vendors or suppliers.
• When ecommerce operators pay the consideration collected to the vendors, they have to deduct an amount, like TCS and pay the net amount.

Exceptions

The exceptions to the above provision are as follows:

1. Hotel accommodation/clubs (unregistered suppliers).
2. Transportation passengers- radio taxi, motor cab, or motorcycle.
3. Housekeeping services like plumbing, carpentry, (unregistered suppliers).

GST Registration for Ecommerce collecting TCS 

The operators of ecommerce are liable to collect TCS. They are required to get compulsorily registered under GST, and there is no threshold limit exemption. The sellers, who are supplying goods, through the online website are ecommerce players; they too need to get registered under GST except in few conditions.

Registration Conditions for GST registration for Ecommerce are as follows:

1. Compulsorily Registration

Every E-Commerce operator is required to collect TCS must register under GST. This means mandatory registration is required.

2. Section 9(5) of CGST Act

According to this section, every person who makes supplies through an ecommerce operator is required to get registered except for those mentioned in section 9(5) not required to register.

In the above 3 cases of section 9(5) of CGST Act, there is no GST registration to be done provided the threshold for registration does not exceed 20 lakhs.

3. Supplier of services

This means that every supplier of ecommerce making supplies through ecommerce platform. Whose threshold limit is less than 20 lakhs, provided they do not make any inter-state supplies, are exempted from registration.

4. Supplier of goods

This means the supplier of goods on the ecommerce platform is not exempted from registration.

5. Ecommerce company

The ecommerce company must register in every state where they are making supplies of goods or services. They have to register as GST registration for ecommerce.

Liability for GST Registration for Ecommerce to undertake TCS arises

The liability arises only when the ecommerce operator is trying to make the payment to the vendor. This payment is the amount of collection on the vendor’s behalf for the supplies made by him through the online portal. This is the net value collected called at TCS.

Conclusion

It can be concluded that from the ecommerce point of view, the GST registration for ecommerce is a necessity. There should be GST registration in every state, in which they operate before 1^ST October 2108, which is the effective date of implementing of the TCS provision.

This will reduce the tax evasion significantly as the tax will be collected at every tax transaction and every source.

Read our article:GST Registration Requirements (Goods and Services)