GST Registration for Ecommerce Collecting TCS under GST

GST registration rules and forms for e-commerce operators, online sellers, e-retailers and dealers vary from the normal or regular registration, where the Tax Collection at Source (TCS) provisions apply to the e-commerce operator. The article dives into finer details of the same.

Latest updates 

22nd June 2024
In the 53rd GST Council meeting, the Council recommended that the penalty for defaulting TCS compliance as per Section 122(1B) will only apply to e-commerce operators liable to collect TCS u/s 52. The same will apply once notified by the CBIC and with restrospective effect from 1st October 2023. Accordingly, e-commerce operators of Section 9(5) will be subject to general penalty for non-compliance.
 

Who will collect TCS under GST?

e-Commerce aggregators are responsible under the GST law for collecting and depositing tax at the rate of 1% on each transaction under the Section 52 of the CGST Act. Any dealers/traders selling goods/services online would get the payment after deduction of 1% tax. All the traders/dealers selling goods/services online would need to get registered under GST even if their turnover is less than the prescribed threshold limit, for claiming the tax collected by the aggregators. 
 

Notes: 

1. Supplier of services, who is not supplying through an e-commerce operator liable to collect tax at source, having a turnover of less than Rs.20 lakh are exempted from obtaining registration under GST.

2. e-Commerce operators liable under Section 52 of the CGST Act cannot opt into the composition scheme.

GST registration rules for those liable to TCS

As per Section 24 of the CGST Act, all the e-commerce companies must obtain GST registration mandatorily. 

Any person who is required to collect TCS must electronically submit an application for registration, duly signed or verified through Electronic Verification Code (EVC), using the form GST REG-07 either directly on the GST portal or from a facilitation center notified by the Commissioner.

As per the CGST Rule 12(1A), the e-commerce operator not having physical presence in the State or Union Territory where the operations are conducted should mention such State name in part-A of the REG-07 form. Further, the State in which the principal place of business is situated must be mentioned in part-B, if it is different from the State mentioned in part-A.

The proper officer will grant registration after verification and issue a certificate of registration in form GST REG-06 within 3 working days from the date of submission of application. The entire process has been illustrated in the flowchart given below.

Cancellation of GST registration for e-commerce operators

If the proper officer enquires or ascertains through a proceeding that a person is no longer liable to collect TCS, then the officer will cancel the registration. The cancellation shall be communicated to the said person electronically in form GST REG-08. The procedure given under the CGST Rule 22 shall be followed for cancellation.

The officer will follow the same procedure for cancellation as for normal taxpayers.

GST registration for people supplying online information from outside India

What does online information and database access or retrieval services mean? Online information and database access or retrieval services [OIDAR] means services whose delivery is mediated through the internet. The supply is essentially automated involving minimal human intervention and impossible without information technology.

Applicability

1st February 2023

Budget 2023 update(to be notified)- The definition of OIDAR is modified to remove reference of “services essentially automated and involving minimal human intervention”. Thus, online information and database access or retrieval services mean services whose delivery is mediated by IT over the internet or an electronic network and lists down a few of such services, given below as examples.

These are a few examples of electronic services from the service tax list which will be considered as OIDAR-

• Advertising on internet
• Providing cloud services (Google Drive)
• Provision of e-books, movie, music, software and other intangibles via internet (Hotstar, Amazon Prime Video)
• Providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network
• Online gaming (Steam)
• Web-based services providing trade statistics, legal and financial data, matrimonial services, social networking sites etc.

Non-OIDAR services

• Supplies of goods, where the order and processing is done electronically
• Supplies of physical books, newsletters, newspapers or journals
• Services of lawyers and financial consultants who advise clients through email
• Booking services or tickets to entertainment events, hotel accommodation or car hire
• Educational or professional courses, where the content is delivered by a teacher over the internet
• Offline physical repair services of computer equipment
• Repair of software, or of hardware, through the internet, from a remote location
• Advertising services in newspapers, on posters and on television
• Internet backbone services and internet access services (BSNL broadband)

It has also been clarified that using the internet just to communicate or facilitate the outcome of service needs does not always mean that a business is providing OIDAR services.

GST registration process for OIDAR service providers

For further information, read the related articles, listed below:

Step-by-step guide for GST registration

Impact of GST on e-commerce operators

GST compliance prescribed for e-commerce operators

All you need to know about tax collected at source under GST

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