Have composition GST number, want to sell Online, What to do?
Before knowing about the E-commerce platforms where goods and services are bought/procured and sold let’s take a tour of history and know how we used to buy and sell Products and services right when the humankind recognized the need for trade which in turn came from their desire, firstly we entered barter system of trading then after globalisation and industrial development we traded goods for money and then when the time and distance separated manufacturer and Consumers from each other and this was the time stock-and-sell model of online sale of goods came into league and thereafter we saw tremendous increase in online way of trading goods and services and then came the marketplace model of buy and sell, which we call as E-commerce. Let’s see the journey from Traditional online model to New E-commerce model and how does it will impact this industry in GST regime.
| Sale of Goods – “Online Traditional Model, “ – Stock and sell model | Sale of Goods – Marketplace – The aggregator |
The purchased goods/ services is then delivered to the customer by various modes like courier, hand delivery, option to pick from stores of the supplier etc. |
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E Commerce in previous taxation laws Vs. GST Regime : The present indirect tax structure in India is complicated and contains many taxes levied by both Central as well respective State governments. Indian commerce has been fragmented owing to differences in state VAT laws, and one of the industries that has been worst hit by the same is electronic commerce. Both E- Commerce and its taxation was in evolving stage even under the current regime, and its structures were in invention and transformation stage and thus, as of date no concrete model can be attributed. The status of present levies has been summarised in brief as under:
| Excise and E Commerce | Service Tax and E Commerce | VAT/Sales Tax and E Commerce |
| It is an general anomaly that there is no levy of excise in the field of electronic commerce as no one can engage in virtual production of goods.
Even the activities of packing and repacking undertaken by the electronic commerce platforms for the purpose of logistics were ruled as not amounting to manufacture. But Further repacking, relabeling and tagging to enable to make it for retail sales could also amount to manufacture with regard certain products like health care, consumer goods etc., |
Sale of goods is not subject to service tax. However, the commission or any other charges for permitting use of electronic platform, operator’s trade
name etc. retained by electronic commerce platforms is chargeable to service tax. |
It is applicable on sale. In case of inter-state sale, CST is charged. Form C is not required in most of the cases as the customers are
unregistered dealers and therefore, the highest rate of tax is applicable. In case of intra-state sale, VAT is applicable. |
| What is E Commerce GST: GST Law recognizes the need for rules specific to the ecommerce industry, with specific provisions with respect to e- commerce broadly under two categories : |
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Requirements from Supplier under GST Regime :
For E- Commerce Operators :
- They are mandatorily required to be registered under GST irrespective of their turnover.
- Certain service categories may be notified, on supply of which, tax shall be paid by the e-commerce operator, and If the e-commerce operator does not have an establishment in the state, then any person representing the e-commerce operator will be liable to pay the tax
- E-commerce operator should collect tax @ 2% on the net value of taxable supplies made through their platform, where the consideration, with respect to such supplies, has to be collected by the operator & need to file GSTR 8 by 10th of the month (The rate of 2% is presumed here but still now nothing has been finalized yet and notification to this effect is awaited.
For Suppliers on E-commerce platforms :
- All suppliers on e- commerce platforms are mandatorily required to register under GST. So, even e-commerce suppliers whose aggregate turnover does not exceed the threshold limit for registration will have to compulsorily register their businesses under GST and obtain GST Registration Number.
- A person who supplies goods or services through an e-commerce operator will not be eligible for registration under composition Hence , even if the person’s aggregate turnover does not cross Rs. 1.5 Crores he/she does not have the option to become a composition taxpayer.
- Suppliers on e-commerce platforms are required to file periodical returns under GST ( GSTR 1, GSTR 2A, GSTR 2, GS ITC 1)
Hence our point is well answered when we seek into GST law, that when I am a Composition dealer under GST I cannot register myself selling my goods or services on online platforms until I opt for regular taxation scheme under GST by opting out from Composition scheme.
Way ahead for E- Commerce in GST :
Selling through e commerce portal under GST would require more Compliances to be fulfilled by an electronic commerce operator. Apart from Monthly returns for inward supplies, outward supplies etc., an additional liability in terms of filing statement of supplies made through it has been casted on such operators. Apart from above there is also requirement for GST registration for online sellers in each of the states they operate. The concept of centralised registration shall no longer be a savior and thus, such firms would be required to register themselves in each of the state where they have their presence. Thus, E- commerce firms shall require a lot of change at the planning and implementation level. GST is going to be a mixed bag for electronic commerce, with the benefits outweighing the concerns. However, the real picture shall be clear only after it is implemented.
Also, if an e-commerce platform wrongfully reports a transaction against a seller, unless reconciled, it is considered as supply by seller. Platforms will have to develop mechanisms for all cash flow from their platform to seller, such that TDS can be affected. In case of direct shipping by sellers to the end customer, the cash-on-delivery mechanism will require a major revamp.
For Service Aggregators like Uber and AirBnB, compliance and gst payment complexities are due to the dual nature of participants — drivers and passengers. This potentially complicated transaction requires aggregators to comply with TDS as well as actual sales transactions. Furthermore transparency is required for other e-commerce verticals, such as ticketing and tourism, adventure or events, hotels or resort bookings, B2B players, and other similar industries, wherein sellers supply services to end customers, but do not necessarily involve cash flow via the platform.
Conclusion : Once the provisions for E-commerce operators in GST is prescribed and GST rate on e commerce method of buy and sell is decided then the compliance procedures will find its way in and thereby GST would also make sure that not any of sector which constitutes our economy is left loose or allowed to work in an unstructured manner. Tax revenues would flow from these unorganized sectors which in previous taxation laws were enjoying the benefits of no compulsory registration, no taxation either (Excise, Service Tax, CST/VAT). So in GST for Ecommerce sellers there are so many Tax compliances to be followed and to keep the returns ready for filing on the due dates. And ERP Software is must in the changed scenario of Indirect taxation system to be GST compliant and to file returns in due time as customers would always want to associate with suppliers who are GST compliant for the part of Input Tax Credit they are interested. And accounting software in India Tally. ERP 9 is one such best software which acts as your guardian for your survival in GST galaxy, a galaxy which is in under construction process by allowing you to interact with it, know the requirements of the GST portal (the doorway to GST basic pillars) guide you with registering as taxpayers of the new Galaxy (Goods and Service Tax) and preparing GST returns and also to share with you the knowledge and wisdom through its online forums which acts as a knowledge guide and brings us close to this galaxy (GST) by various means and modes like webinars, live interactions with fellow CA’s, sharing of ideas and thoughts about intrinsic topics in GST and so on. One is sure to benefit from these initiatives taken by Tally. ERP 9 (Release 6.2) in this long journey in GST which is impossible without an ERP partner.
