E-Commerce Industry – GST Implications

Last Updated at: March 13, 2020
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E-commerce Industry GST implications

1. The previous models of indirect taxation created a lot of confusion as far as e-commerce businesses were concerned. As a result, tax evasion as well as tax avoidance was rampant in this industry. But the arrival of GST has sorted out this mess completely by providing clarity with regards to the taxation values.

Picture1

E-Commerce has been a confusion under most of the indirect taxes previously. However, thanks to GST – it puts an end to most of the confusions and provides better clarity.

Picture2

Check out some of the articles below to find step by step information on company registration, iso registration or income tax related services and avail our resources to help you through the process.We are one of the best online service providers in the market for tax registrations and legal documentation.

INVENTORY MODEL

In this model E-Commerce operator (ECO) purchases/manufactures the goods and sells them on E-Commerce platform. He provides his services on E-Commerce platform.

Make Your Business GST Ready

Example: Dominos sells its own products on its website, Vakilsearch sells its own services on its website.

Invoicing will be done as follows in these cases: (Rate of GST depends on type of product or service which is being provided)

Picture4

In this model – Supplier will sell the goods or services first to E-Commerce operator – and E-Commerce operator will further sell the goods/services to Customer.

Invoice No.1:  Supplier to E-Commerce Operator:

Invoice will be raised by supplier to E-Commerce operator with their GSTN numbers.

Seller in the invoice will be – Supplier

Customer in the invoice will be – E-Commerce operator.

(Note: In case if Supplier and ECO belong to the same state CGST and SGST will be charged in the invoice, whereas if supplier and ECO belong to different states IGST will be charged in the invoice)

Invoice No.2: E-Commerce operator to Customer:

Invoice will be raised by the E-Commerce operator to Customer for sales.

Seller in the invoice will be – E-Commerce operator

Customer in the invoice will be – Ultimate customer purchasing the goods or services.

(Note: In case if ECO and Customer belong to the same state CGST and SGST will be charged in the invoice, whereas if ECO and Customer belong to different states IGST will be charged in the invoice)

AGGREGATOR MODEL:

This is model adopted by top e-commerce entities like Flipkart, Swiggy, Amazon, Urban clap, and most of the others. E-Commerce operator will just provide a platform where suppliers can register themselves and advertise their products to the customers. In this case ECO will charge a fees/commission from supplier for its services. Registration is mandatory for ECO in this case.

Even suppliers supplying goods through ECO in this model – should also get mandatorily registered even if their turnover is less than 20 lacs. But suppliers providing services through ECO platform – need not register if turnover is less than 20 lacs.

Picture5

Invoice No.1 – From Supplier to Customer:

The invoice will be raised by the supplier to the customers directly. (This happens on Amazon and Flipkart)

Seller name on the invoice will be – Suppliers name along with his GSTN number

Buyer name on the invoice will be – Customer’s name

(However, ECO can display its brand name alone on the invoice – which is being done by Amazon and Flipkart today)

(Note: In case if Supplier and Customer belong to the same state CGST and SGST will be charged in the invoice, whereas if Supplier and Customer belong to different states IGST will be charged in the invoice)

Invoice No.2 – From ECO to Suppliers:

ECO will raise an invoice to its suppliers for collecting the fees and commission.

Seller in the invoice will be – E-Commerce operator

Customer in the invoice will be – Supplier supplying the goods or services.

(Note: In case if ECO and Supplier belong to the same state CGST and SGST will be charged in the invoice, whereas if ECO and Supplier belong to different states IGST will be charged in the invoice)

1. A clear plan of taxation has been beneficial for the authorities but also for the e-commerce companies. Now, they are aware of the amount of money they need to pay. At the same time, there is no confusion with regards to the time limits within which the due taxes must be paid.

0

E-Commerce Industry – GST Implications

1756

1. The previous models of indirect taxation created a lot of confusion as far as e-commerce businesses were concerned. As a result, tax evasion as well as tax avoidance was rampant in this industry. But the arrival of GST has sorted out this mess completely by providing clarity with regards to the taxation values.

Picture1

E-Commerce has been a confusion under most of the indirect taxes previously. However, thanks to GST – it puts an end to most of the confusions and provides better clarity.

Picture2

Check out some of the articles below to find step by step information on company registration, iso registration or income tax related services and avail our resources to help you through the process.We are one of the best online service providers in the market for tax registrations and legal documentation.

INVENTORY MODEL

In this model E-Commerce operator (ECO) purchases/manufactures the goods and sells them on E-Commerce platform. He provides his services on E-Commerce platform.

Make Your Business GST Ready

Example: Dominos sells its own products on its website, Vakilsearch sells its own services on its website.

Invoicing will be done as follows in these cases: (Rate of GST depends on type of product or service which is being provided)

Picture4

In this model – Supplier will sell the goods or services first to E-Commerce operator – and E-Commerce operator will further sell the goods/services to Customer.

Invoice No.1:  Supplier to E-Commerce Operator:

Invoice will be raised by supplier to E-Commerce operator with their GSTN numbers.

Seller in the invoice will be – Supplier

Customer in the invoice will be – E-Commerce operator.

(Note: In case if Supplier and ECO belong to the same state CGST and SGST will be charged in the invoice, whereas if supplier and ECO belong to different states IGST will be charged in the invoice)

Invoice No.2: E-Commerce operator to Customer:

Invoice will be raised by the E-Commerce operator to Customer for sales.

Seller in the invoice will be – E-Commerce operator

Customer in the invoice will be – Ultimate customer purchasing the goods or services.

(Note: In case if ECO and Customer belong to the same state CGST and SGST will be charged in the invoice, whereas if ECO and Customer belong to different states IGST will be charged in the invoice)

AGGREGATOR MODEL:

This is model adopted by top e-commerce entities like Flipkart, Swiggy, Amazon, Urban clap, and most of the others. E-Commerce operator will just provide a platform where suppliers can register themselves and advertise their products to the customers. In this case ECO will charge a fees/commission from supplier for its services. Registration is mandatory for ECO in this case.

Even suppliers supplying goods through ECO in this model – should also get mandatorily registered even if their turnover is less than 20 lacs. But suppliers providing services through ECO platform – need not register if turnover is less than 20 lacs.

Picture5

Invoice No.1 – From Supplier to Customer:

The invoice will be raised by the supplier to the customers directly. (This happens on Amazon and Flipkart)

Seller name on the invoice will be – Suppliers name along with his GSTN number

Buyer name on the invoice will be – Customer’s name

(However, ECO can display its brand name alone on the invoice – which is being done by Amazon and Flipkart today)

(Note: In case if Supplier and Customer belong to the same state CGST and SGST will be charged in the invoice, whereas if Supplier and Customer belong to different states IGST will be charged in the invoice)

Invoice No.2 – From ECO to Suppliers:

ECO will raise an invoice to its suppliers for collecting the fees and commission.

Seller in the invoice will be – E-Commerce operator

Customer in the invoice will be – Supplier supplying the goods or services.

(Note: In case if ECO and Supplier belong to the same state CGST and SGST will be charged in the invoice, whereas if ECO and Supplier belong to different states IGST will be charged in the invoice)

1. A clear plan of taxation has been beneficial for the authorities but also for the e-commerce companies. Now, they are aware of the amount of money they need to pay. At the same time, there is no confusion with regards to the time limits within which the due taxes must be paid.

0

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