E-commerce is a rapidly growing market currently valued at $30 billion and there is no stopping it. This rise and expansion of e commerce business paved the way for small suppliers to earn a little extra money and expanding customer base by selling their goods online. With GST in force, a few regulations that could significantly change the modus operandi of such small suppliers is what I am going to talk in this article, which will act as a reminder of GST for Suppliers on E-commerce Platforms.
As per GST Law, ‘electronic commerce’ shall 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.
Compliance for Suppliers:
- Tax Deduction at Source: As per GST law, E commerce aggregators/portals/ operators are responsible under the GST law for deducting and depositing tax at the rate of 1% from each of the transaction. Thus dealers/traders selling goods/services online would get the payment after deduction of 2% tax.
- Compulsory Registration– The exemption limit of 20 lakhs(10 lakhs for hilly states as notified under GST) does not apply to E commerce Suppliers. E-commerce Suppliers are mandatory required to be registered under GST. Thus, All the traders/dealers selling goods/services online have to get themselves registered under GST even if their turnover is less than 20 Lakhs for claiming the tax deducted by E-commerce operators.
- Tax Credit: Any tax paid by Operator in his monthly return will be treated as Tax paid by Supplier and hence he can take its credit in electronic cash ledge.
- Double Entry System of Book Keeping: All the sellers are required to submit a monthly statement of outward supplies in his valid return for the same calendar month or any preceding calendar month. This statement must match monthly statement (containing inter alia, the details of the amount collected on behalf of each supplier in respect of all supplies of goods and/or services) furnished by e-commerce operator of outward supplies of goods and/or services through it, during a calendar month.
If any discrepancy is found and not rectified by the supplier in his return for the month in which discrepancy is communicated will get added to the output liability of the said supplier, in the succeeding calendar month and he will be required to pay tax along with interest.
- Complicated Paper Work: in order to avoid above-mentioned discrepancy a huge amount of paperwork is created, making it difficult for both the e-commerce operator and the supplier to comply with the tax department. Failing to comply can lead to a penalty of Rs. 25,000, which is a significant burden for a small supplier.
Additional Time Window granted to suppliers:
E-commerce sector is granted a time window to comply for GST. Thus as of now, Operators are not required to deduct TDS till a date which will be notified later. This additional time is given to Suppliers to get themselves registered under GST.
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