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e-Invoicing Impact on TCS and e-commerce operators under GST

Updated on:  

08 min read

e-Invoicing is being implemented in India in a phased manner. It began from 1st October 2020 for taxpayers with a turnover greater than Rs.500 crore. Later, e-invoicing was made applicable for businesses with a turnover higher than Rs.100 crore and Rs.50 crore from 1st January 2021 and 1st April 2021 respectively.

Overview of TCS applicability under GST and liability of e-commerce operators

Tax collected at source (TCS) under GST is the tax collected by e-commerce operators on the net value of taxable supplies made through it by other suppliers, where the consideration for these supplies is collected by the e-commerce operator.

Section 52 of the CGST Act requires all e-commerce operators, who are not acting as an agent, to collect TCS on all sums collected by it on behalf of the supplier of goods or services. TCS at 1% is collected from the supplier on the net taxable value of the supply.

Guidelines for e-commerce operators to integrate their ERP systems with the Sandbox system

The e-invoicing system is available to e-commerce operators (ECO) to report invoices to the Invoice Registration Portal (IRP), that were generated by them on behalf of their suppliers.

The e-commerce operators shall follow the procedure listed below to integrate their ERP system with the sandbox of the IRP:

  • Select the option ‘e-commerce operator’ under the registration module and enter the GSTIN type as ‘TCS’ to get registered on the sandbox portal. Update the OTP received on the registered mobile number.
  • The API credentials mentioned below may be generated:
    • Client ID
    • Client secret
    • Username and password
  • Login to the sandbox tool. Prepare the payload for IRN generation and test it in this tool.
  • The payload shall contain the seller’s GSTIN, buyer’s GSTIN, the e-commerce operator’s GSTIN, along with the other details.
  • For using functions such as ‘Cancel IRN/ EWB’,’ Generate EWB by IRN’ or ‘Get new IRN’, provide the ‘Supplier GSTIN’ along with other required parameters.

Steps for integration with the production system

E-commerce operators shall follow the procedure mentioned below to integrate their ERP system with the production system of the IRP:

  • Login to the IRP and click on the ‘API registration’ tab.
  • The application for whitelisting the IPs can be sent along with a summary test report. A maximum of four Indian Static IPs is allowed.
  • After scrutinising the application, the network team will whitelist the IPs.
  • Next, API credentials such as client ID, client secret, username and password can be generated.
  • The username and password for the other GSTINs under the same PAN can also be created by selecting the above GSTIN.
  • Using these credentials, the payload for IRN generation can be prepared, and IRNs can be generated.
  • As mentioned previously, the payload shall contain the seller’s GSTIN, buyer’s GSTIN, the e-commerce operator’s GSTIN, along with the other details.

Points to be noted by suppliers or e-tailers on e-invoicing

  • E-commerce operators registered under GST can generate IRNs and e-way bills on behalf of the supplier of goods (as well as cancel these IRNs/e-way bills on behalf of the supplier).
  • The supplier selling goods through the e-commerce operator’s online platform should have a turnover greater than Rs.50 crore. Either the supplier or e-commerce operator can generate IRNs.
  • If the e-commerce operator is selling goods under his brand name, then in this case, the e-commerce operator acts as a supplier. So, if the e-commerce operator’s turnover is greater than Rs.50 crore, then an e-invoice should be generated for such transactions.
  • If the e-commerce operator is issuing invoices to the suppliers for using their online platform, and the e-commerce operator’s turnover is greater than Rs.50 crore, then IRNs should be generated as well.

What is the scope of access to IRN generated by e-commerce operators and suppliers?

The table below illustrates the scope of access:

IRN generated/cancelled byAccess by the E-commerce operatorAccess by Supplier
E-commerce operatorYesYes
SupplierNoYes
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