Selling through e-commerce marketplaces brings specific GST obligations. Most online sellers must register for GST regardless of turnover, the e-commerce operator collects TCS (Tax Collected at Source) on their sales, and sellers reconcile this in their returns. This guide explains registration, TCS and return filing for e-commerce sellers.

Navigating GST Regulations for Online Merchants

India’s e-commerce industry is experiencing rapid growth, necessitating specific compliance measures under the Goods and Services Tax (GST) framework. The Indian government has established distinct regulations for online sellers, which this article will detail.

Who is an Online Seller?

Individuals or entities transacting goods or services via an online platform or operator are identified as e-commerce sellers. These vendors might utilize one or several e-commerce platforms and may also conduct business through traditional physical stores alongside their online operations.

GST Registration Requirements for Online Sellers

GST registration requirements for online merchants depend on whether they provide goods or services. For those supplying goods, GST applies without any turnover exemption limit. Service providers, however, are subject to GST only if their annual turnover surpasses INR 20 lakh. Certain service categories, as outlined in Section 9(5) of the CGST Act, are exempt from GST. These typically include:

• Passenger transport services offered via e-commerce operators, such as Uber or Ola.
• Hotel accommodations booked through aggregator platforms like Yatra.com, unless the service provider is already mandated to register under Section 22(1) of the CGST Act.
• Housekeeping services, including plumbing and carpentry, arranged through aggregators like Urban Company, unless the supplier is required to register under Section 22(1) of the CGST Act.
• Restaurant services, excluding those provided by establishments situated in specified premises that offer hotel accommodation with a declared tariff exceeding INR 7,500 per unit per day or its equivalent.

Sellers falling under the taxable categories must obtain GST registration as regular taxpayers; they are ineligible to opt for the composition scheme.

GST Returns Required for Filing

Registered suppliers under the GST Act are mandated to submit specific returns:

GSTR-1

This monthly statement details outward supplies of goods, services, or both. Small businesses can opt for the Quarterly Return Monthly Payment (QRMP) scheme, allowing quarterly GSTR-1 filing if their previous financial year’s turnover was under INR 5 crore. Eligibility ceases in the next quarter if turnover exceeds INR 5 crore in any current quarter. Monthly GSTR-1 is due by the 11th of the subsequent month, while quarterly filing is by the 13th of the month following the quarter. Quarterly filers may use the Invoice Furnishing Facility (IFF) for the first two months of a quarter by the 13th of the succeeding month.

GSTR-3B

This return provides a consolidated summary of both inward and outward supplies. It is filed monthly or quarterly, depending on the seller’s annual turnover. E-commerce sellers under the QRMP scheme with an annual turnover below INR 5 crore can file it quarterly. The due date for monthly GSTR-3B is the 20th of the following month. For quarterly filers, specific dates (e.g., 22nd/24th of the month succeeding the quarter) apply based on state or UT.

GSTR-9

An annual return required from e-commerce sellers with an annual turnover exceeding INR 2 crore. The filing deadline is December 31st of the subsequent financial year.

GSTR-9C

A reconciliation statement filed by registered e-commerce sellers whose financial year turnover exceeds INR 5 crore. This is a self-certified form with the same due date as GSTR-9, meaning it must be submitted by December 31st following the relevant audited financial year.

TCS Applicability for Online Merchants

E-commerce platforms, such as Amazon and Flipkart, are obligated to deduct Tax Collected at Source (TCS) at a rate of 1% on the value of supplies provided by online sellers when payments are processed. This TCS amount is then remitted by the e-commerce operator to the government. Online sellers receive their payments after this 1% TCS deduction and can claim this amount as a credit when submitting their GST returns.

TDS Applicability for Online Merchants

Online platform operators must deduct Tax Deducted at Source (TDS) at 1% from the gross sales value of an e-commerce seller, either when crediting the seller’s account or during payment, whichever occurs first. However, TDS is not applicable if the e-commerce supplier’s gross sales of goods or services in the preceding year did not exceed INR 5 lakh. Sellers must provide their Permanent Account Number (PAN) or Aadhaar to the e-commerce operator; failure to do so results in a 5% TDS deduction. No TDS is applied to non-resident e-commerce sellers.

Frequently Asked Questions

Do e-commerce sellers need GST registration?

Sellers supplying through an e-commerce operator generally must register regardless of turnover.

What is TCS in e-commerce?

The operator collects a small percentage of the sale value as Tax Collected at Source and deposits it for the seller.

How do sellers claim TCS credit?

TCS appears in the seller’s cash ledger after the operator files GSTR-8, and can be used to pay tax.

Which returns must e-commerce sellers file?

Regular sellers file GSTR-1 and GSTR-3B and reconcile TCS from the operator’s GSTR-8.