E-commerce has transformed the retail marketplace into a digital market, which is convenient and beneficial for sellers, e-commerce operators, consumers, and tax authorities. Along with this, the government has taken various measures to protect consumers and ensure fair and accurate taxation. One such important measure is the implementation of GST. For e-commerce operators, tax collection at source and GSTR-8 compliance are critical components. Here we discuss and delve into the best practices for GSTR-8 compliance. First, let us understand the fundamentals of GSTR-8.
GSTR-8 is a mandatory return that e-commerce operators registered under GST are required to file. It is a comprehensive summary of all supplies made through the e-commerce platform during a particular period. Basically, it consists of details of supplies and the tax collected at source (TCS) on such supplies.
Due Date and late fees for filing GSTR-8
The due date for filing GSTR-8 for a particular tax period is the 10th of the succeeding month. A late fee of Rs. 200/- (CGST Rs. 100/- and SGST Rs. 100/-) with a higher cap of Rs. 5000/- is applicable for delay in filing the return. But there is no late fee at IGST. Along with the late fee, interest at 18% per annum is also levied for the delayed period from the due date of filing up to the date when it is filed.
Read More: Filing Frequency And Due Dates For GSTR-8
Pre-requisites for filing GSTR-8
The pre-requisites for filing GSTR-8 are as follows:
- The e-commerce operator must be registered under GST with a valid GSTIN.
- They should not have opted for the composition scheme or have a UIN.
- They should not be non-resident taxpayers.
- The e-commerce operator must have a valid digital certificate or electronic verification certificate to validate the returns.
Revision of GSTR-8
GSTR-8, once filed, cannot be revised. If any mistakes are noticed by the taxpayer, he has to rectify them in the next return.
Significant factors of GSTR-8 compliance
One of the intentions for the implementation of TCS under Section 52 of the CGST Act of 2017 was to track the sales that happen through e-commerce platforms. we can list the significant factors affecting GSTR-8 compliance as follows:
- Registration: As per the CGST Act, all e-commerce operators must obtain an e-commerce GSTIN in every state in which they undertake sales. they should file GSTR-8 from all the states in which they have registered sellers and deposit the TCS collected within the due date specified.
- Filing GSTR-8: All e-commerce operators registered under GST are required to file GSTR-8 returns every month with details of the transactions and tax collected and paid within the due date as part of the compliance requirement.
- Tax collection at source: As per the CGST Act, e-commerce operators must collect TCS at 1% (CGST-0.5% plus SGST-0.5%) of the net taxable value of the sale for every seller on their platform.
- Tax remittance: The tax so collected should be remitted to the government through the GST portal before the 10th of the succeeding month. This brings transparency and integrity to e-commerce transactions.
- Input Tax Credit: After the e-commerce operator files the GSTR-8, the TCS credit will reflect in the GSTR-2A of the seller. when the seller accepts the details, after which the amount gets reflected in the electronic cash ledger of the seller. He can then claim the input tax credit. When the details do not match, the seller can reject it and get it rectified with the e-commerce operator.
- Matching of Returns: When there is a mismatch between the returns filed by the e-commerce operator and the seller, the tax authorities send notices to both the operator and the seller, who have to respond within the time mentioned. If the seller and the e-commerce operator do not respond within the given time, the input tax credit will be added to the seller’s tax liability along with interest.
- Cooperation with Tax Authorities: Cooperating with the tax authorities during the audit and responding to notices and requests from the authorities also form an important part of compliance.
Best Practices for GSTR-8 compliance
E-commerce taxpayers can ensure compliance by adopting the following best practices:
- Maintaining accurate records: The e-commerce operators and sellers both must maintain accurate records of the transactions done on the e-commerce portal. This is a crucial best practice for staying compliant. Maintaining proper books of account helps in accurate GST calculation and seamless claiming of credit. It is also useful during audits and investigations by the tax authorities. Important documents and records should be kept safely so that they can be produced at the time of audits and other inquiries by the tax authorities.
- Accurate invoicing: Invoices form an integral part of GSTR-8 reconciliation. The taxpayers have to ensure that the invoices contain all details like GSTIN, product description, HSN codes, and tax rates. They also have to ensure that the invoice details are accurate and complete. Invoice management and invoice updating are crucial parts of compliance.
- E-way bills: Generating and using e-way bills for interstate transactions exceeding the specified threshold limits helps facilitate the movement of goods and smoother tax compliance.
- Reconciliation of GST returns regularly: Reconciling GSTR-8 with the counterparty’s returns regularly ensures that the e-commerce transactions are properly accounted for and matched. It helps in the timely rectification of the discrepancies, ensuring accurate reporting and timely payment of GST liabilities, so that penalties and notices from the tax authorities can be avoided. Various GST reconciliation tools and software are available, which can help in the reconciliation process.
- Timely Filing: Timely filing of returns is an important best practice. late filing can result in late fees, interest, and other penalties. A calendar of returns comes in handy for filing the returns on time.
- Conduct internal audits: To ensure accurate reporting and filing, regular internal audits are needed so that the business can identify complex compliance issues and address them. the risk of adverse consequences due to non-compliance can be avoided. A periodic review of the relevant returns can help identify areas for improvement and enhance compliance.
- Updating GST rules and regulations: Many changes take place in the GST rules and regulations periodically. Staying updated with the latest rules and regulations is a very important best practice. Businesses should regularly be aware of the amendments, notifications, and advisories issued by the tax authorities and implement the changes appropriately to ensure smooth business operations.
- Advanced technology usage: businesses can benefit from the technological advancements of recent times. Many automation tools and advanced software can be used for compliance processes like reconciliation, billing, recording invoices, and filing returns. this helps minimize errors due to manual input and streamline processes. Investing in GST-compliant software that integrates seamlessly with the e-commerce platform of the operator will make compliance easier and is good for the financial health of the business.
- Educating and training employees: Educating and creating awareness among employees on GST compliance procedures is important. These procedures include record maintenance, invoicing, and filing returns. they should be made aware of the penalties and other consequences of non-compliance. It also encourages employees to work towards compliance.
- Professional help: Seeking professional help can ease compliance and ensure best practices, including maintaining accurate records, paying taxes, and filing returns on time.
The implementation of GST in e-commerce has been beneficial to sellers, e-commerce operators, and consumers. it has also brought transparency and integrity to the tax system and helped the tax authorities monitor and curb tax evasion. But there are still many challenges faced by the e-commerce industry that can be addressed by following best practices and compliance procedures. GSTR-8 compliance plays a vital role for e-commerce operators. With the right tools, accurate record-keeping, and education, GSTR-8 compliance can be managed so that businesses can focus on growth and providing good service to their customers. The government, on its part, has consistently issued amendments and advisories to protect consumers and simplify compliance for e-commerce operators.
Frequently asked questions
How can an e-commerce operator ensure compliance under GSTR-8?
- The first step in compliance is registration in GST.
- Maintain an accurate record of all e-commerce transactions.
- Collect the correct tax at the source for supplies.
- Pay the collected tax in the GST portal on time.
- Conduct regular audits to ensure correct records are uploaded in GST.
- Cooperate with the tax authorities during audits and investigations.
How can a taxpayer check GST compliance?
To check GST compliance, a taxpayer has to do the following:
- Review transactions and records to ensure accuracy regularly.
- Enable a calendar of returns to ensure all returns are filed on time.
- Ensure GST payments are made on time to avoid penalties and fines.
- Updated with the latest GST regulations issued by the authorities