The Goods and Services Tax (GST) is a comprehensive indirect tax that was implemented in India on 1st July, 2017.
The government of India has undertaken a big taxation reform by introducing GST, which is expected to enhance the growth of E-commerce. GST is a single destination-based indirect tax that is applicable across all states on the supply of goods or services. The CGST Act, under Section 9(5), defines electronic commerce as “the supply of goods or services or both, including digital products, over a digital or electronic network” and defines Electronic Commerce Operator (ECO) as “any person who owns, operates, or manages a digital or electronic facility or platform for electronic commerce.” E-commerce operators like Amazon act as an intermediary and bring buyers and sellers together, and facilitate transactions. ECOs have to mandatorily register for GST regardless of turnover.
“Persons who sell goods or services, or both through an ECO are E-commerce Sellers.”
REGISTRATION REQUIREMENTS FOR E-COMMERCE SELLERS
| Type of Activity | Registration Requirement |
| Selling Goods | Compulsory Registration |
| Providing Services other than those listed u/s 9(5) | Register only if turnover is more than 10/20 lakhs |
| Providing Services listed u/s 9(5) | Not required to register |
Earlier in the service tax, a centralized system for registration was available,but under the GST a centralized system for registration is not available as the place of supply will decide the scope of registration.
GST is likely to increase costs for the E-commerce industry due to high expenses in storing and warehousing goods. The company have to pay taxes on unsold goods and can only reclaim them upon sale.
FOLLOWING ARE A FEW EXAMPLES OF REGISTRATION REQUIREMENTS OF DIFFERENT INDUSTRIES
| Industry | Examples of E-commerce operator | Registration requirement |
| E-Commerce Sellers (goods) | Amazon, Flipkart | The seller is required to register. |
| Hotel (turnover less than 10/20 lakh) | OYO, Make My Trip | The hotel is not required to register. |
| Hotel (turnover of the hotel more than 10/20 lakh) | OYO, Make My Trip | The hotel is required to register. |
Previous indirect tax policies created considerable confusion and led to extensive litigation, impeding the growth of the e-commerce sector in India. The lack of clarity resulted in tax evasion, causing substantial revenue losses for the government. The introduction of GST aims to streamline the tax system, close loopholes, and potentially lessen the overall tax burden.
GST has a significant impact on the E-commerce marketplace. The influence of GST on the landscape of Indian e-commerce is unmistakable. With streamlined tax processes, including mechanisms like Tax Collected at Source (TCS) and Input Tax Credit (ITC), GST has forged the path towards uniformity, transparency, and compliance with the e-commerce sector. From mandatory registration to addressing common challenges, navigating GST requirements is critical for e-commerce entities to operate legally and contribute to a fairer tax ecosystem.
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