What is e-commerce?
E-commerce is the buying and selling of goods or services over the internet, with the payment arranged online. The legal question is who must register, not how large the warehouse is.
What counts as e-commerce?
A sale on the seller’s own site, and a sale on someone else’s marketplace, are both e-commerce. The marketplace is an electronic commerce operator when it owns or manages the digital platform. The seller is the person who supplies the goods or the service. A website does not create a new kind of person. The seller is still a proprietorship, a firm, a limited liability partnership, or a company.
Who must register?
An operator that has to collect tax at source under section 52 must register, even below the ordinary turnover line. A person who supplies goods through that operator must also register, unless a notification keeps out a person whose turnover is still within the threshold and who does not supply from one state to another. A person who supplies services through an operator follows the ordinary threshold, except for the services section 9(5) names, where the operator pays the tax as if it were the supplier. The ordinary lines are on the GST registration page.
What is the tax the operator collects?
On a supply made through it, other than a section 9(5) supply, the operator collects tax at source at one percent of the net value of the taxable supplies: half a percent as central tax and half a percent as state tax, or one percent as integrated tax. The supplier claims that credit in the return. It is not a discount, and it is not the whole tax on the sale. Return dates are on the GST returns page.
What if the seller has no marketplace?
A seller who takes orders only on that seller’s own site is not an operator collecting tax at source. Registration then follows the ordinary threshold, plus the other compulsory cases, such as an inter-state supply of goods. Movement of the goods can still need an e-way bill, on the e-way bill page.
Frequently asked questions
Four questions cover registration, tax collected at source, the website, and a rebate.
Does every online seller need GST?
No. A seller of services through an operator follows the ordinary turnover threshold, unless the service is one where the operator itself pays the tax. A seller of goods through an operator is outside that comfort, except where a notification exempts a person still within the threshold.
Is the operator’s collection the seller’s whole tax?
No. Tax collected at source is a credit in the supplier’s return. The supplier still pays the tax on the supply.
Does a website by itself create a company?
No. The site is the shopfront. The person behind it is still a proprietorship, a firm, an LLP, or a company, and that person holds the GST registration.
Is there a general GST rebate for selling online?
No. Online sale does not reduce the tax rate. The rate is the rate of the goods or the service.
Sources
An electronic commerce operator is defined in the GST law. Tax collected at source is section 52. Compulsory registration is section 24. Some services are taxed on the operator under section 9(5).