Let’s understand the GST Calculations for E-Commerce Business.
As an e-commerce business, it’s crucial to understand the basics of GST, GST Calculations,, and registration process.
All of these are discussed in this article.
The GST’s Relevance to E-Commerce Business
In India, e-commerce businesses are classified as “aggregators” or “marketplaces” that facilitate the exchange of goods or services between sellers and buyers, making them subject to GST.
As a result, these online platforms must collect and remit GST on behalf of the vendors.
The GST rate is determined by the type of goods or services being supplied.
You can find out the GST Rates on various goods or services through: List of HSN Code with Tax Rates
How to register for GST as an E-Commerce Business?
E-commerce businesses operating within the purview of GST must obtain GST registration.
The registration procedure is conducted entirely online, and enterprises can apply for it on the GST portal.
The registration process entails the submission of several documents, including PAN card, Aadhaar card, proof of address, and bank account information.
Following registration, businesses receive a unique GST identification number (GSTIN).
Read about the process in detail here: How to get GST Registration if I am starting a new online business
Or, you can also consult a CA from our team and get all your GST Registration Process enquiries solved.
How to charge GST in E-Commerce Business
GST is designed as a destination-based tax, meaning that goods and services should be taxed at the point of usage or consumption, not where they originate.
The location of supply determines which type of GST shall be charged on the goods or services for GST collection i.e. CGST, SGST, or IGST
An incorrect location of supply can result in tax collection by the wrong state.
Below are a few examples to demonstrate the type of GST levied based on various places of supply.
Example 1: Intra-state Sales
Gayatri, from Rajkot, Gujarat, purchases a mobile phone from Alpha Mobiles, an Ahmedabad-based seller on Amazon.
As both the buyer and seller are located in the same state, only CGST and SGST will be charged.
Example 2: Inter-state Sales
Gayatri, from Rajkot, Gujarat, purchases a mobile phone from Mobile Hub, a Bangalore-based seller on Amazon.
As the supplier’s location is in a different state than the buyer’s location, IGST will be charged.
Example 3: Supply to a Third Party
Gayatri, from Rajkot, Gujarat, orders a mobile phone from Amazon for her sister Radhika, who lives in Udaipur, Rajasthan.
Mobile Mart, based out of Mumbai, Maharashtra, is the seller who delivers the order to Radhika while Gayatri is billed by Amazon.
Under the Goods and Services Tax regulations, it is presumed that the mobile phone has been delivered to the buyer, Gayatri, despite it being delivered to her sister.
As this constitutes intra-state supply, IGST will be charged.
For any other doubts on GST Calculation, you can take a call from an expert.
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Essential Points to keep in mind for E-Commerce Businesses for GST
- If tax officers require information regarding supply or stock from e-commerce operators, they will issue a notice to the operator.
- The e-commerce operator must provide the requested details within 15 days of receiving the notice from an officer not below the rank of Deputy Commissioner.
- If suppliers store their products at warehouses operated by e-commerce operators, the warehouse must be registered as an additional place of business.
- If a supplier sells tax-exempted goods through an e-commerce portal, the operator does not have to levy TCS because the net taxable value of the product is nil.
- TCS is not collected when a supplier sells goods through its own e-commerce portal.
- TCS does not apply to the import of goods and services.
Conclusion
In conclusion, it is crucial for e-commerce businesses to understand the complexities of GST in India and comply with the relevant laws and regulations to avoid any legal issues. By staying informed and maintaining accurate records, businesses can ensure they are charging the correct GST rates, doing GST Return Filing on time, and paying taxes promptly. This not only helps them avoid penalties but also contributes to the country’s economic growth by promoting transparency and accountability in the tax system.
Moreover, If you want any other guidance relating to GST Registration, please feel free to talk to our business advisors at 8881-069-069.
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