GST for Ecommerce: Types, Impact, and a Complete Guide for Online Sellers!

The eCommerce market is rapidly growing in India with an increasing number of online shoppers. This is all due to the increasing use of smartphones and internet connectivity. Before the GST regime, there was no proper tax imposed on online sales. Today, GST for ecommerce has streamlined selling through online platforms across state borders.

As we scroll below to explore the blog, we will deep dive into types of GST, impact, and more. Start reading right away! 

What is GST for Ecommerce? 

GST for ecommerce is a simple term used to describe Goods and Services Tax rules imposed on businesses selling products/services online. It refers to marketplaces like Amazon, Meesho, Flipkart, Myntra, etc.

GST for online business ensures all the transactions through e-commerce marketplace or private platforms are taxed accurately and transparently. It facilitates complete tracking of sales through digital platforms. 

Types of GST Applied to Ecommerce Transactions? 

The supplier and receiver locations for online transactions identify types of GST for ecommerce sellers. It’s either intrastate or interstate GST; let’s check it in more detail. 

Intra-state Transactions: CGST & SGST 

For ecommerce trade within the same state, the transaction is considered to be intrastate. In other words, if the supplier selling and buyer ordering through the online platform reside in the same state, then that’s intra-state supply.

• Central GST (CGST): This is applied by the Indian central government
• State GST (SGST): This is levied by the respective state government where the trade takes place.

For eg, an apparel designer in Surat sells to a customer in Surat through Myntra, the seller will charge CGST and SGST on the supply. 

Inter-state Transactions: IGST 

For suppliers and recipients of goods and services in different states, the trade is interstate. Here, IGST is applied: 

• The Central government of India applies the Integrated GST on the supply
• IGST is distributed between the central and the recipient state government 

For eg: If the manufacturer is selling online from Maharashtra to a buyer in Gujarat, the IGST will be shared between the Central government and Gujarat state government. 

What if Digital Goods are Sold? 

Digital goods like ebooks, templates, etc, sold on online platforms, under GST for Ecommerce, will be treated as follows: 

• Type of Transaction: B2B / B2C 
• Place of Supply: Location of the Supplier 

For example, let's consider, if a doctor in Maharashtra orders an ebook on Ayurveda from a publisher in Kerala through Amazon. 

The Place of supply will be Kerala 

Under GST for Ecommerce IGST applies on the purchase of an ebook as the supplier is from another state. 

Core Elements of GST for Ecommerce

1. Taxable Transactions: Sale of goods or services by an ecommerce operator is levied with GST.
2. Online Marketplaces: Ecommerce operators like Myntra, Amazon, etc. should collect TCS for trade made by third-party vendors.
3. Compliance Rules: eCommerce platforms should follow the compliance norms, like regular GST filing and reporting, to avoid penalties. 

GST for Ecommerce Seller: Impact on Operations 

Mandatory GST Registration: 

• For ecommerce operators selling through marketplaces or their own websites, GST registration is mandatory even if the revenue is below the threshold. 

Tax Collected at Source: 

• Ecom marketplaces should collect TCS of 1% on the net value of taxable trade, which results in a bit lower payouts to the sellers. 

File Returns Monthly and Annually 

• It is mandatory to file GSTR-1, GSTR-3B, and other returns for Ecommerce sellers.
• GST for Ecommerce operators, GSTR-8 filing becomes mandatory. 

E-way Billing Requirements 

• E-way billing is mandatory for sellers shipping goods across the states to ensure smooth logistics tracking and minimise disputes during transit. . 

Returns and Cancellations 

• Under GST for ecommerce, returns, refunds, and cancellations need to be properly adjusted to avoid triggering of GST notice. 

Conclusion 

Truly, GST for eCommerce has eased online selling operations through a unified tax ecosystem across the country. Doesn’t matter if you are selling through a marketplace or through your own website; GST for online business brings a fair tax module, streamlined interstate selling, and visibility into digital transactions.

As the eCommerce industry is growing aggressively, staying GST-compliant becomes mandatory. Save this guide and start keeping a check on all the ecommerce regulations from today. 

FAQs on GST for eCommerce 

Are there any exemptions from TCS collection under GST for eCommerce? 

Yes, there are exemptions for services like passenger transport and accommodation bookings. 

What is the threshold limit of registration under GST for ecommerce? 

There’s no GST threshold limit for eCommerce unlike regular sellers. 

Considering GST for online business, can ITC be claimed? 

Yes, ITC can be claimed for GST applied on commissions and service charges. 

What is the applicability of GST on eCommerce Sales? 

The eCommerce commission applies an 18% GST rate from the seller.

About the author

Priyanka Chaudhari

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Priyanka Chaudhari is an enthusiastic writer with an ocean of experience in the tech world. She writes mainly on topics like accounting, e-invoicing, GST, and billing. Currently, she is working with Munim and comes up with innovative topics for the readers. Stay tuned to her blogs.