Electronic Commerce means the supply of goods or services or both, including digital products over digital or electronic network. Digital products such as E-books, music, graphic design works etc.

Electronic Commerce operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.

Tax Implications under GST Act,2017

Registration

Every person supplying goods through an e-commerce operator shall be mandatorily required to register irrespective of the value of supply made by him.
A person supplying services other than the supplier of services u/s 9(5) of the CGST Act,2017 through an e-commerce platform are exempted from obtaining registration provided their aggregate turnover does not exceed Rs. 20 lacs ( Rs. 10 lacs in case of specified special category states) in a financial year.
Every e-commerce operator has to obtain compulsory registration irrespective of the value of supply made by him.

Applicability of TCS provisions

As per section 52 of the CGST Act,2017, e-commerce operator, not being an agent, is required to collect TCS (Tax Collection at Source) at the rate not exceeding 1 percent of the net value of taxable supplies made through it, where the consideration with respect to such supplies is to be collected by such operator.

Registration for TCS would be required in each state/UT as the obligation for collecting TCS would be there for every intra-state or inter-state supply. In order to facilitate the obtaining of registration in each state/UT, e-commerce operator may declare the Head office as its place of business for obtaining registration in that State/UT where it does not have physical presence.

E-commerce operator has to obtain separate registration for TCS irrespective of the fact whether e-commerce operator is already registered under GST as a supplier or otherwise and has GSTIN.

The “net value of taxable supplies” means the aggregate value of taxable supplies of goods or services or both, other than services on which entire tax is payable by the e-commerce operator, made during any month by a registered supplier through such operator reduced by the aggregate value of taxable supplies returned to such supplier during the said month. The value of net taxable supplies is calculated at GSTIN level.

TCS is not required to be collected on exempt supplies.

TCS is not required to be collected on supplies on which the recipient is required to pay tax on reverse charge basis. TCS is not liable to be collect on Import of goods or services.

A composition taxpayer cannot make supplies through e-commerce operator. Thus question of collecting TCS in respect of supplies made by the composition taxpayer does not arise.

Payment of TCS is not allowed through Input Tax Credit of e-commerce operator.

TCS collected is to be deposited by the e-commerce operator separately under the respective tax head (i.e. Central tax/State tax/UT tax/Integrated tax). Based on the statement (Form GST-8) filed by the e-commerce operator, the same would be credited to the electronic cash ledger of the actual supplier in the respective tax head. If the supplier is not able to use the amount lying in the said cash ledger, the actual supplier may claim refund of the excess balance lying in his electronic cash ledger.

GST Returns

Every operator is required to furnish a statement electronically, containing the details of outward supplies of goods or services effected through it including the supplies of goods or services returned through it and the amount collected by it as TCS during a month within 10 days after the end of such month in FORM GSTR-8

Foreign E-commerce Operator

Where registered supplier is supplying goods or services or both through a foreign e-commerce operator to a customer in India, such foreign e-commerce operator would be liable to collect TCS on such supply and would be required to obtain registration in each State/UT. If the foreign e-commerce operator does not have physical presence in a particular Sate/UT, he may appoint an agent on his behalf.

TDS implications under Income Tax Act,1961

Section 194-O has been inserted w.e.f. 01.10.2020 which says that “where sale of goods or services of an e-commerce participants is facilitated by an e-commerce operator through its digital or electronic facility or platform”, such e-commerce operator is required to deduct TDS u/s 194-O.

E-commerce participant means a person resident in India selling goods or services (including digital products) through digital platform for e-commerce. “Services for this purpose, includes fees for technical services/Professional services. For the purpose of this section, e-commerce operator shall be deemed to be the person responsible for paying to e-commerce participant.

Tax is deductible at the rate of 1% of the gross amount of such sale of goods/services. If the recipient doe not have PAN, tax is deductible at the rate of 5%.

Tax is not deductible u/s 194-O if the following conditions would be satisfied

E-commerce participant is an individual or HUF;
Gross amount of such sale of goods/services through e-commerce operator during the previous year does not exceeds Rs. 5 lacs; and
Such e-commerce participant has furnished his PAN or Aadhar number to an e-commerce operator.

Applicability of Equalisation Levy on e-commerce supply of goods or services

E-commerce operator – It means Non-resident who owns, operates, or manages digital or electronic facility or platform for online sale of goods or online provision of services or both.

With effect from 01.04.2020: Equalisation levy shall be charged at the rate of 2% of the amount of consideration received/receivable by an e-commerce operator from e-commerce supply of goods/services facilitated by it –

to a person resident in India; or
to a non-resident in the “specified circumstances”

to a person who buys such goods/services using internet protocol address located in India

Consideration received/receivable: For the above purpose, consideration received/receivable for e-commerce supply of goods or services shall include:

Consideration for sale of goods or provision of services irrespective of whether e-commerce operates owns the goods or service is provided or facilitated by e-commerce operator (however it shall not include consideration for sale of such goods owned by a resident or provision of services provided by a person resident in India or by a Indian PE of non-resident).

However, consideration received or receivable for e-commerce supply of goods or services shall not include consideration which are taxable as royalty or fees for technical services in India under the Income Tax Act read with Double Taxation agreements.

What are specified circumstances discussed above

Sale of advertisement which targets a customer who is resident in India or a customer who access the advertisement through internet protocol address located in India; and

Sale of data collected from a person who is resident in India or from a person who uses internet protocol address located in India

When Equalisation levy is not applicable

Where the e-commerce operator making supply of goods/services has a Permanent Establishment (PE) in India and such e-commerce is effectively connected with such PE.

Where equalisation levy is levied under the provisions of section 165 of Finance Act,2016;

Sales/turnover/gross-receipts of the e-commerce operator from e-commerce supply of goods/services made or provided or facilitated is less than Rs.2 crore during the previous year.

Talk to a CA

Collection, Recovery and other Procedure

The above equalisation levy shall be paid by every e-commerce operator to the credit of the Central government quarterly as follows:

For the quarter ending June 30 of the Financial Year – On or before July 7 of the financial year
For the quarter ending September 30 of the Financial Year – On or before October 7 of the financial year
For the quarter ending December 30 of the Financial Year – On or before January 7 of the financial year
For the quarter ending March 31 of the Financial Year – On or before March 31 of the financial year

Penalty

Failure to pay equalisation levy (wholly or partly) – A penalty equal to the amount of equalisation levy

Failure to furnish statement – Rs. 100 for each day of default

Note: The above penalty is in addition to equalisation levy tax and interest.

Income Tax Exemption u/s 10(50)

Income arising from the above activities in the hands of e-commerce operator is exempt u/s 10(50) w.e.f. Assessment year 2021-22.

Also Read: E-Commerce operator and Tax implications

Also Read: Income Tax on F&O and Intraday Trading

Also Read: Tax on NRI for sale of Immovable Property in India

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