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2022

Compliances for E-Commerce Businesses in India

E-commerce has transformed the way business is done in India.Much of the growth for the industry has been triggered by an increase in internet and smartphone penetration. The customers are quickly shifting from retail market to online Platforms like Flipcart, Amazon, Snapdeal etc. for their purchase requirements. Similarly, the retail businesses are also shifting from retail market to online platforms. This article discusses about compliances required by entities engaged in e-commerce market.

 

An e-Commerce operator is a person who owns, operates, or manages a digital/electronic facility for the sale of goods and services. He is responsible for making payments to the e-Commerce participant on such sales.

 

An e-Commerce participant is a person who sells goods, services, or both through an electronic facility provided by an e-Commerce operator.

 

Compliances under GST:

 

Mandatory Registration under GST:

 

  • Generally registration requirement under GST arises only once a business entity crosses certain threshold of aggregate turnover.

  • However, for retails willing to sell their products through online E-Commerce Platforms like Amazon, Flipcart, Snapdeal etc. it is mandatory to get registered under GST irrespective of turnover.

  • Hence, GST registration has to be obtained before listing of products with these E-Commerce Platforms.

 

Applicability of TCS:

 

  • If the value of goods/services supplied through an e-commerce website is collected by the e-commerce operator, then it is mandatory for every e-commerce operator to collect TCS @ 1% on Net Value of Taxable Outward Supplies (1% IGST for Interstate sales & 0.5% CGST & 0.5% SGST for Intrastate sales) while making payment of such amount to the dealers in accordance with the provisions of per Section 52 of CGST Act, 2017.

  • Once, TCS Return is filed 

  • The amount of TCS so collected by the operator shall be credited to Electronic Cash Ledger of the dealer. The dealer can utilized this tax credit for making payment of their GST dues.

 

TCS Return Filing by E-Commerce Operators:

 

  • GSTR – 8 is the GST Return required to be filed by every e-Commerce operator who has collected TCS for all the taxable supplies made through it.

  • The details of taxable supplies and the tax collected at source by the e-commerce operator must be reported in the GSTR-8.

  • The return in Form GSTR-8 needs to be filed on the GST Portal by 10th of the next month.

 

Details to be furnished in GSTR-8:

 

Following details must be furnished by the e-commerce operator in GSTR-8:

 

  1. Details of Supplies attracting TCS:

 

  • GSTIN of Supplier (the suppliers’ name gets auto-populated).

  • The gross value of supplies made and returned to such Supplier by registered as well as unregistered persons;

  • Enter the amount collected at source under IGST/ CGST/ SGST heads.

 

  1. Amendments to details of supplies attracting TCS:

 

  • Enter the correct details against erroneous entries uploaded for any of the previous months in Tile 4- “Amendment to details of Supplies attracting TCS”.

  • Correction can be made in supplier-wise details related to the particular month and financial year which has been incorrectly uploaded by the e-commerce operator in the earlier period.

  • Values mentioned against registered vendors and unregistered vendors and TCS deducted against such supplies can be amended.

 

  1. Details of Interest:

 

  • View the interest on the delay in payment of the TCS liability, the filing of the TCS return, etc., under “Details of Interest” tile, if any.

 

  1. Payment Details:

 

  • After viewing the interest tile, click on the “Payment of Tax” tile to enter the details of taxes paid for that particular month;

 

Compliance under Income Tax:

 

TDS Deduction under Section 194O:

 

  • Section 194O has been introduced in the Union Budget 2020. According to Section 194O, an e-Commerce operator is required to deduct TDS for facilitating any sale of goods or providing services through an e-Commerce participant.

 

  • Accordingly Section 194N, from 1st October 2020, every E-Commerce operator is required to deduct TDS @ 1% at the time of credit of amount of sale of goods/services to the account of an e-commerce participant or at the time of payment thereof to such e-commerce participant by any mode, whichever is earlier.

 

Threshold Limit:

 

  • No TDS shall be deducted by E-commerce operator if the gross amount of sale of goods, services, or both during the previous year does not exceed Rs 5 lakh.

Rate of Deduction:

 

  • TDS under section 194O shall be deducted at the rate of 1% where a valid PAN is furnished by the e-commerce participant.

  • If the e-Commerce participant does not furnish his PAN, TDS must be deducted at the rate of 5%, as per provisions of Section 206AA.

 

Residential Status of Deductee/Payee:

 

  • TDS under this section must be deducted only if the participant is resident in India. No TDS will be deducted if the participant is a non-resident.

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