Ecommerce Operator- Legal Compliances

In the new era, a lot of people have decided to shift their business over internet. GST which is called to be a unified tax, have shown its implications over the ecommerce operator. This article aims to explain the provisions related to compliances to be fulfilled by an ecommerce operator. It becomes important to understand who is an ecommerce operator and its related provisions.

E–commerce operator as any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. 

E commerce operator can be divided into 2 categories:

• Where Consideration for the online sale through ECO, is collected by ECO itself like AMAZON.
• Where Consideration for the online sale through ECO is NOT collected by ECO but collected by Supplier directly.

Ecommerce operator who are required to get GST Registration

E-commerce operators have to register regardless of the turnover. Threshold limit of Rs. 40 lakh/20 lakh/10 lakh is not applicable to e-commerce operators. They are not allowed to register under the composition scheme.

E-commerce sellers Registration Requirement

• Supply through ECO in the form of Transportation of passengers by a radio-taxi, motor-cab, maxi-cab and motor cyclecab-owner need not to get registered under GST even if his turnover exceeds threshold limit.
• Providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes. Supplier is required to obtain registration upon his turnover crossing threshold limit
• Services by way of house-keeping, such as plumbing, carpentering etc. Supplier is required to obtain registration upon his turnover crossing threshold limit
• Supply of Goods
  • If the Consideration is directly received by ECO Supplier is to obtain registration as soon as it makes supply through ECO, irrespective of his turnover
  • If the consideration is not received by the ECO directly, Supplier is required to obtain registrationupon his turnover crossing threshold limitsor on meeting of requirement of Mandatory registration under CGST Act.
• Supply of services other than those specified above
  • If consideration is received directly by the ECO,Supplier is to obtain mandatory registration only when his turnover crosses Rs. 20 lacs in a financial year. Till that, it can make supply through ECO without GST registration.
  • If consideration is not received by the ECO directly, Supplier is required to obtain registration upon his turnover crossing threshold limits or on meeting of requirement of Mandatory registration under CGST Act

Collection and payment of GST

• Transportation of passengers by a radio-taxi, motor-cab, maxi-cab and motor cycle
  • If consideration is received by the ECO- ECO will collect and paid GST on such supply, irrespective whether supplier is registered or not.
  • If consideration is not received directly by the ECO- Supplier will collect and pay GST, if he is registered
• Providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes
  • If consideration is received by the ECO-
    • Supplier is registered – Supplier will collect and pay GST
    • Supplier is not registered- ECO will collect and pay GST
  • If consideration is not received directly by the ECO- Supplier will collect and pay GST, if he is registered
• Services by way of house-keeping, such as plumbing, carpentering etc.
  • If consideration is received by the ECO-
    Supplier is registered – Supplier will collect and pay GST
    Supplier is not registered- ECO will collect and pay GST
  • If consideration is not received directly by the ECO- Supplier will collect and pay GST, if he is registered
• Supply of Goods
  • If consideration is received by the ECO-Supplier will collect and pay GST
  • If consideration is not received directly by the ECO- Supplier will collect and pay GST, if he is registered
• Supply of services other than those specified above
  • Till registration requirement arises, no GST will be collected and paid and post that Supplier will collect and pay GST

Other points to be highlighted:

• 01st April 2020 onwards, the e-commerce operators not having a physical presence in any particular state/UT has been allowed to apply for TCS registration based on their registered head office/premises address.
• GST Registration is now mandatory only for e-commerce operators who are liable to collect tax at source, as against the earlier provision of every e-commerce operator.
• Rate of TCS is notified as 1% of net taxable supplies for intra-state supplies. (i.e 0.5% of CGST and 0.5% of SGST )
• Rate of TCS is notified as 1% of net taxable supplies for inter-state supplies. (1% of IGST)

Takeaway

Carrying out business through ecommerce provides a lot of benefits to the operator but there are a lot of compliances to be made failure of which will lead to penalty. Advice can be taken from professionals at the Legal Window to set up a business on ecommerce.