GST For E-Commerce – All You Need To Know

The Lok Sabha in August 2016 passed the bill for Goods and Services Tax or GST. This amendment was made to replace every other tax being levied by the central and the state governments on the various goods and services provided by operators/suppliers/merchants.

GST integration has been made mandatory for all the goods and services operators in the country; including E-commerce operators.  Today, we will tell you all about how what GST means to the regular E-commerce operator.

To know how GST will affect the E-commerce operator, you need to know what E-commerce is and who is referred to as an E-commerce operator.

The Model GST Law or MGL defines E-commerce as – “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”; and an E-commerce operator is defined by the MGL as follows – “Every person who, directly or indirectly, owns, operates or manages an electronic platform which is engaged in facilitating the supply of any goods and/or services. Also, a person who is providing any information or any other services incidental to or in connection with supply of goods and services through electronic media would be considered an operator.”

Now let’s understand GST for E-commerce better!

Value Of Taxable Supplies

Every E-commerce operator has to collect an amount calculated at the rate of 1% of the net worth of taxable supplies made through the supplies collected by the operator. The net value of taxable supplies of goods and services refers to the aggregate value of taxable goods or services after the deduction of the aggregate value of taxable supplies returned to the supplier during the month in consideration.

The aforementioned amount shall be paid to the account of the relevant government (Central or State) within ten days of the next month.

Every operator needs to furnish an electronic statement containing the details of the outward supply of goods or services, including the supply of goods and services that are returned during the month in question. This needs to be submitted within ten days from the start of the next month.

Claim Of Credit

The supplier who has supplied the goods or services to the operator needs to claim the credit in his electronic cash ledger. This application of credit reflects the amount collected in the operator’s statement.


The details of the supplies furnished by the operator need to be matched with the corresponding details of the outward supplies provided by the concerned supplier.


In the case of a mismatch between the details given by both the parties, the discrepancy will be brought to the notice of both the parties in the manner and timeline prescribed.


Non-Rectification Of Mismatch

After the discrepancy has been notified, if neither the supplier nor the operator has rectified the statement for the concerned month, the net taxable value will be added to the output tax liability of the supplier in his/her return for the month succeeding the month in which the discrepancy was notified.

In addition to this, the concerned supplier will be liable to pay the tax payable with respect to the supply in question along with the interest rates determined by the central or state government(s). This interest will be calculated from the date when the tax was initially due till the date of its payment.

Serving Of Notice And Reply

Any authority belonging to the rank of Joint Commissioner and above, can issue a notice to the operator regarding the furnishing of details related to –

  • Supplies of goods or services provided through by the operator at any given point of time
  • The stock of goods held by suppliers making supplies through the operator, in godowns or warehouses addressed by whichever name, and declared as additional places of business by the vendors.

Every operator served with a notice needs to furnish the required information within 15 days of the notice being served.

Levy Of Penalty

Upon failure to furnish the requested information within the aforementioned timeline, the operator is liable to pay a penalty which may extend up to 25,000 INR.

That folks was GST for E-commerce! Hope it helped you understand the bill better. Watch this space for more updates about GST from the Finapolis Knowledge Series event on 17th March, 2017!  You can also tune in to watch the event live on Facebook.

Check out at 7.00 p.m. today!

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