29 Jun 2017

e-Khaliyan

How GST Will Impact eCommerce Bussiness and Aggregator

E-Commerce is one such sector. E-commerce businesses have been extensively covered under the Revised Model GST Law. This segment has largely been unregulated so far. The GST law has now come up with specific sections detailing compliance requirements related to e-commerce companies and online aggregators.
The Goods and Services Tax will impact the behaviour of both sellers and buyers transacting online. Today’s consumers have many options to order goods or services online. Additionally, such transactions are not limited to India alone. From the comfort of their homes, Indian shoppers can purchase any legally permitted goods or services from anywhere in the world and have it shipped or consumed here.
gst effect on ecommerce

Indian E-commerce giants like Flipkart and Snapdeal dominate the market, with thousands of sellers registered on their marketplace platforms selling online directly to consumers. Competing with these domestic players are international entrants like Amazon and e-Bay, which maintain separate portals for domestic and international orders.

The Model GST law has clearly specified that E-commerce Operators supplying to a person in India are mandatorily required to get their business registered under Goods and Services Tax. However, there still exists ambiguity over the applicability of these provisions to International E-commerce Operators such as Amazon.com and Ebay.com, which transact in foreign currency. The government may come up with additional clarifications and rules for such operators.
Under the current indirect tax regime, all orders originating outside India attract Basic Customs Duty, Countervailing Duty (CVD), and Special Additional Duty (SAD). These duties are collected from the buyer at the time of online purchase and deposited with the government at the time of Entry into India.
GST is going to subsume CVD and SAD, but Basic Customs Duty will remain. Thus, under the new regime, the customer will be charged Integrated Goods and Services Tax (IGST) and Basic Custom Duty while ordering from an international portal. Usually, this breakup is not shown at the time of order, billed cumulatively as “Customs Fees”.


1) What is considered as e-commerce according to GST rules?



E-Commerce is defined like this in Section 43B(d) of the MGL (Model GST Law) – Electronic Commerce to mean the supply or receipt of goods and/ or services, or transmitting of funds or data, over an electronic network, primarily the internet, by using any of the applications that rely on the internet, like but not limited to e-mail, instant messaging, shopping carts, web services, universal description Discovery and integration (UDDI), File Transfer Protocol (FTP) and Electronic Data Interchange (EDI) whether or not the payment is conducted online and whether or not the ultimate delivery of the goods and/or services is done by the operator.

2) Who is considered as an e-commerce operator?

Section 43B(e) of the MGL defines an Electronic Commerce Operator (Operator) as every person who, directly or indirectly, owns, operates or manages an electronic platform which is engaged in facilitating the supply of any goods and/or services. Also a person providing any information or any other services incidental to or in connection with such supply of goods and services through electronic platform would be considered as an Operator. A person supplying goods/services on his own account, however, would not be considered as an Operator.

3) Is it mandatory for e-commerce operator to obtain registration?

Yes. Section 19 r/w Schedule-III of the MGL, provides that the threshold exemption is not available to e-commerce operators and they would be liable to be registered irrespective of the value of supply made by them.

 4) Whether a supplier of goods/services supplying through e-commerce operator would be entitled to threshold exemption?

Ans. No. Section 19 r/w Schedule-III of the MGL, provides that the threshold exemption is not available to such suppliers and they would be liable to be registered irrespective of the value of supply made by them.

 5) Who is an aggregator?

Section 43B(a) of the MGL defines aggregator to mean a person, who owns and manages an electronic platform, and by means of the application and communication device, enables a potential customer to connect with the persons providing service of a particular kind under the brand name or trade name of the said aggregator. For instance, Ola cabs would be an aggregator.

 6) Is an aggregator required to be registered under GST?

Yes. Section 19 r/w Schedule-III of the MGL, provides that the threshold exemption is not available to aggregators and they would be liable to be registered irrespective of the value of supply made by them.

 7) What is Tax Collection at Source (TCS)?

In terms of Section 43C(1) of the MGL, the e-commerce operator is required to collect (i.e. deduct) an amount out of the consideration paid or payable to the actual supplier of goods or services in respect of supplies of goods and / or services made through such operator. The amount so deducted/collected is called as Tax Collection at Source (TCS).