GST Registration And Compliance for E-commerce Sellers

Prabhat Nigam

11 Oct, 2023

With the business world going global and buyers shifting their focus towards digital marketplaces, the sellers are compelled to take their business online not just for better presence and gaining a bigger marketplace but more importantly to stay in the business and survive from the competition from other e-commerce players. For this, there is a need to develop understanding of compliances under GST for e-commerce sellers.

Since this is a new medium for the sellers, not much clarity is available for the e-commerce sellers regarding the compliances for a seller under GST Acts. This piece of information attempts to bring clarity towards the registration and other GST compliances that a seller needs to fulfil while conducting his/her business through digital medium and electronic means.

Who is called as a e-commerce seller under GST?

Before looking at the definition of an e-commerce or electronic commerce seller, let us first understand what electronic commerce is. As per section 2(44) of the CGST Act, electronic commerce means supplying of goods and services including the digital products using a digital medium or electronic network.

The CGST Act^[1] does not define an e-commerce seller. However, on the basis of the above definition, an e-commerce seller or an electronic commerce seller can be said to be a person who is selling products including goods, services, digital products using an electronic network or through digital medium provided by an e-commerce operator.

Registration requirements under GST for e-commerce sellers   

The people who are selling goods or planning to sell their goods online usually sell through one or more e-commerce operators apart from selling their products in their shops and showrooms.

These sellers are classified in the following three categories depending on their liability to get themselves registered under the Act and subsequently activate their liability to pay taxes:

1. Sellers selling Goods: The sellers who are selling or planning to sell physical products thorough e-commerce operators need to get themselves mandatorily registered with the CBIC before initiating the e-commerce business. They are required to get themselves registered irrespective falling below the threshold limit set by the government. In fact, the e-commerce operators such as Amazon, Flipkart etc. do not allow the unregistered sellers not having the GST Identification Number (GSTIN) to use their platforms for selling their products online.
2. Sellers selling Services:

•  An e-commerce business of supplying services to the customer needs to get registration if the annual turnover of the business exceeds Rupees 20 lakhs.
• However, for the following services provided under section 9(5) of the Central Goods and Services Act, 2017, there is no mandatory requirement to be registered under the GST Act.

i. Services of passenger transportation through an e-commerce operator like OLA, Uber etc.

ii. Hotel services provided through aggregators like OYO etc.

iii. Housekeeping services under through aggregator platforms like Urban Company etc.

Compliances under GST for E-commerce sellers

Following are the compliances under GST for e-commerce sellers:

GSTR 1 and GSTR 3B: Depending on the turnover of the e-commerce business, an e-commerce seller needs to submit the following returns regularly and periodically. A special scheme under GST for e-commerce sellers is called the Quarterly Return Filing and Monthly Payment of Taxes (QRMP) where the small e-commerce sellers whose annual turnover is less than 5 crores. This scheme helps the e-commerce sellers to file GSTR-3B returns every quarter but pay the taxes every month.

The e-commerce sellers sell their products to the consumers all across the country. Therefore, these sellers will be required to report record of their taxable amount and taxes in every state they sell their products according to their respective rates. GSTR 1 will be filed for all the outward supplied made by the seller during a specific period.

The businesses are also suppose to file summary returns in the form GSTR 3B where the businesses report their business liabilities and ITC credit claims and reversals. These returns are also supposed to be filed state-wise and in GSTR 3B only.

Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) credit claim return:

The electronic commerce operators are supposed to collect TCS from the e-commerce sellers which are then submitted by the electronic commerce operator in the GSTR-8. This TCS submitted by the e-commerce seller to the e-commerce operator can later be claimed by the seller as Input Tax Credit (ITC) by filing claim return.

Annual Return GSTR-9 and 9C

Businesses with turnover more than Rupees 2 crores have to file GST annual return in the form GSTR-9 is an annual reconciliation statement.

Businesses with turnover more than Rupees 5 crores have to file GST annual return in the form GSTR-9C is an annual reconciliation statement.

Sales Returns and Credit notes

A regular occurrence in the business of e-commerce is the sales returns by the customers after ordering the products. This leads to impact on the value of sales, GST liability, ITC credit reversal of the e-commerce seller. Therefore, it is always advisable that due care must be taken by the seller while filing of GST   

TDS by e-commerce seller

Another aspect of the taxation which is usually ignored by the e-commerce sellers is that of Tax Deduction at Source (TDS). E-commerce operators make a number of payments to the electronic commerce operators for various expenses but fail to deduct tax at source which is a mandate of the Income Tax Act. Therefore, all the e-commerce operators must make sure that deductions are made as per the TDS for the expenses and payments made to the e-commerce operators.

Conclusion

As the digital market space grows, there will be a strong need for the businesses seeking opportunities digitally and for that a need to know the compliances under GST for e-commerce sellers. From the above discussion, one can conclude as to which of the electronic commerce businesses need to get GST registration and what all the compliances need to followed under GST by the e-commerce sellers.

FAQs